Navigating Raising Funds and Advice for LatinX Founders
By: Max Tuchman
Tags: Latinx In Tech, Founders, Foundertofounder, Latinx, Fundraising

LatinX is the second-largest population in the U.S. and the fastest-growing group of entrepreneurs. And yet, less than two percent of Venture Capital goes to Latinx founders and less than one percent goes to women of color.

Raising funds as a woman and Latina is challenging. The odds were (and still are!) stacked against me. Over the years, plenty of investors told me to give up. It had nothing to do with my idea, they just didn’t want to take on the risk because I didn’t fit their preconceived mold of a successful entrepreneur. But, as a Latina, giving up isn’t in my DNA.

Fast forward four years and my startup, Caribu, a family-focused video-calling app, is thriving. To date, we’ve raised over $3M in funding and have been the winner or finalist in over 30 international and national pitch competitions. While it hasn’t been easy, I have picked up a few best practices for pitching investors over the years that have helped me along the way:

Get creative with how you fundraise

When I first started the fundraising process, many venture capitalists turned me down because I wasn’t a 15-time founder or based in Silicon Valley. I realized that venture capital isn’t the only route to raise the funds I needed to run Caribu. There is a federal law, called Regulation Crowdfunding, that makes it possible for private companies to raise money not just from investors, but also from friends, customers, and anyone else interested in owning an early piece of your startup.

In addition to leveraging equity crowdfunding on platforms like Wefunder, in 2018 I cashed in my travel points to compete in pitch competitions around the country. This combination helped us close Caribu’s $3M Seed round in 2019. The best way to fund your company is by generating revenue, but it takes money to make money. Looking for alternative sources of capital when you don’t have access to the “old boy’s network” is extremely important. Not only are equity crowdfunding and pitch competitions more entrepreneur-friendly than traditional VC funding, they also give your company a fighting chance against the better-capitalized startups of founders that receive less bias and underestimation.

Challenge the gender biases

Even though I was leading Caribu’s pitch meetings, I realized that my male co-founder, Alvaro Sabido, was questioned about the future vision, while I was pressed on the potential risks and downfalls. Women face far greater scrutiny than men when pitching their startup and there is research to back this up. Most women get asked “preventative questions”, while men get asked “promotion questions” and it affects how much funding they receive. The difference is that promotion questions get you to talk about a favorable future and the prevention questions make you focus the conversation on mitigating risk and losses.

You can’t fix this bias but, as a founder, make sure you’re able to identify a preventative question and respond promotionally, with a plan for how you are going to achieve future growth and capture the massive opportunity.

Stay true to yourself

Studies have shown that most Latinos in the U.S. do not feel that they can bring their whole selves to the office. This isn’t surprising to me, as I’ve been told time and time again to modify my appearance, body language, and communication style. But, when you peel away your culture, you deny your company and your customers of that magic. And when engaging with investors, you want people to invest in who YOU are and your vision. That is truly the greatest competitive advantage you have, and you rob your customers, your growth potential, and the world of your magic if you strip that away.

For example, it’s always a fine line when women founders are asked to speak in front of male investors about the experience of being a woman in male-dominated spaces. Unfortunately, many men feel attacked or interpret your lived experience as an excuse or cop-out. I still sit on these panels because it’s incredibly important that male investors hear our stories so they can amend and improve their behaviors and intrinsic bias. It’s also a GREAT way to weed out potential investors. If someone walks away uncomfortable from a conversation like that then you dodged a bullet. On the flip side, I met my lead investor after a FemaleFounder panel who showed me that he’d support me and appreciated my feistiness as I built my company the way I wanted to.

There is nothing worse than bringing on an investor who doesn’t support you or respect your values. Another example of this is a meeting I had with a potential angel investor in San Francisco. We were meeting at a Starbucks and I put in a mobile order for us in advance. My mobile order name has been “Black Lives Matter” since 2015, so when they called out “two lattes for Black Lives Matter,” I grabbed our coffees. The investor asked why I used that name and I said it was a small way that I could support the movement with an everyday activity, and that I would change the name when police stopped killing unarmed black men. After that interaction, he didn’t end up investing, and I’m not upset about it.

Leverage the power of storytelling

People invest for three reasons: they love the founder, the company mission, or the numbers. Until you have numbers investors can fall in love with, you need to leverage storytelling about yourself and company vision to raise money, hire talent, and sell your product. To be a good salesperson, you have to listen for someone’s pain points and then share a story of how your product or service will lessen or eliminate that pain point. Recently participating in the Google for Startups’ Sales Academy helped me realize that at the end of the day, your job as CEO is to be the Chief Storyteller. Honing this skill is equally as important, and quite frankly essential, for those looking to improve how they pitch their business to investors.

Latinx founders are everywhere. We’re building game-changing companies and, in many cases, real solutions for our communities. If you have an idea that will change the world and make it a better place, drop everything you’re doing, jump in chancletas first, and make it happen.