While the fundraising environment may not be as upbeat as in previous years, companies with solid traction and innovative ideas still have opportunities to secure funding. It’s essential for startups to demonstrate market viability and differentiate themselves to attract investor interest, said Ritu Mathran, co-founder of InCruiter in an interview for DealStreetAsia’s upcoming report on female founders in India.
On gender biases within the industry, Mathran said, “The difficulties in securing funding are not exclusive to female founders. The challenges faced by startups in accessing capital are largely universal and stem from broader economic factors and investor sentiments. While biases may exist, I am optimistic that the investment landscape is evolving, and there is a growing recognition of the value and potential of startups led by women.”
When asked about the most important factors that investors should consider when evaluating a startup, regardless of the founder’s gender, Mathran said, “Annual recurring revenue (ARR) and monthly recurring revenue (MRR) are important metrics to consider. These metrics provide insights into the stability and scalability of the startup’s business model, which are essential for long-term growth. Furthermore, investors should focus on the confidence and competence of the founder.”
Founded in 2018, Bengaluru-based HR tech startup InCruiter provides remote interview solutions for businesses to select candidates through automated interview platforms. The startup raised Rs 1 crore (around $121,351) in a revenue-based funding round led by Recur Club in January last year.
Edited excerpts:-
What led you to become an entrepreneur? How would you describe your entrepreneurship journey so far?
As a co-founder, my journey into entrepreneurship was somewhat predestined, given my background in a traditional Marwari family with a strong entrepreneurial spirit running through its veins. While jobs didn’t particularly appeal to me, I was biding my time for the right moment to embark on my venture. When I landed in Bangalore and settled in, it dawned on me that the time was ripe to take the plunge.
The spark of inspiration came during my tenure at a company in Bangalore, where I saw a gap in the market for a solution to aid companies lacking in interview expertise, especially in technical domains. Drawing from my finance background, I was cautious not to dive in with excessive capital, opting instead for a gradual approach with the potential for significant impact. Thus, the concept of Incruiter was born, a platform facilitating interviews conducted by industry professionals for companies seeking specialized skill sets.
The journey thus far has been immensely fulfilling. Finally, I’m pursuing something that resonates deeply with my passions and aspirations. Moreover, I take great pride in the opportunity to empower women through our company, as reflected in our commitment to employing a significant number of women within our team.
In essence, entrepreneurship has allowed me to realize my long-standing ambition while contributing positively to the professional landscape and fostering gender empowerment.
What are some of the biggest challenges you’ve faced as a female founder? What challenges did you encounter while fundraising? How did you overcome them?
As a female founder, I encountered several significant challenges on my entrepreneurial journey. One of the most prominent challenges was in the development phase of our product. We faced difficulties in effectively communicating our vision to the developers, resulting in subpar output and delays. Additionally, being newcomers to the industry, we lacked connections and understanding of the marketing landscape, making it challenging to acquire clients and establish our presence.
Fundraising presented its own set of obstacles. As women founders, we often heard skepticism and bias from potential investors, which made securing funding a daunting task. We had to work twice as hard to prove the viability and potential of our venture, overcoming gender-based stereotypes and biases along the way.
To overcome these challenges, we adopted a proactive approach. We sought guidance and assistance from experienced professionals who believed in our vision and were willing to support us. Through relentless research and learning, we equipped ourselves with the necessary knowledge in product development, coding, marketing, and sales. Leveraging Anil’s [co-founder Anil Agarwal] engineering background, we strengthened our technical capabilities while simultaneously honing our skills in marketing and sales to navigate the industry landscape better.
Persistence, resilience, and a willingness to learn were crucial in overcoming these obstacles. Despite the initial setbacks and challenges, we remained steadfast in our commitment to our vision, continuously adapting and improving to achieve our goals.
Has the bias towards female founders improved in recent years? Have you seen a mindset change?
It’s a mixed bag. While there may have been biases towards female founders in the past, I haven’t experienced such biases firsthand. I believe that confidence, knowledge, and control over one’s company play significant roles in how investors perceive a founder, regardless of gender. Investors ultimately invest in the person behind the idea, and if they see confidence and competence, they are more likely to support the venture.
In recent years, there seems to be a shift in mindset among both investors and female entrepreneurs. Many women are actively participating in events and networking opportunities tailored for female founders, where discussions around facing challenges and gaining recognition are common. However, I still firmly believe that success ultimately depends on the individual’s ability to articulate their vision and business strategy effectively.
The current landscape also reflects a growing presence of female leaders and entrepreneurs in various industries, including those showcased in platforms like Shark Tank. The success stories of women-led businesses, such as Sugar Cosmetics, further demonstrate that gender is not a barrier to entrepreneurial success.
While biases may have existed in the past, the current scenario seems to be shifting towards a more equitable environment where the focus is on the quality of the idea and the capability of the founder, rather than their gender. Confidence, competence, and effective communication remain key factors in gaining investor support and driving entrepreneurial success, regardless of gender.
Do you think having male co-founders made a difference in your fundraising journey?
Having male co-founders can potentially influence the fundraising journey, but it ultimately depends on various factors. As I mentioned before, what truly matters is the individual’s capability, confidence, and understanding of the business. However, having multiple co-founders, regardless of gender, can indeed be advantageous.
In our case, having a male co-founder in Anil proved beneficial as it allowed us to divide responsibilities effectively. With Anil overseeing the technical aspects and sales/marketing while I handled finance and operations, we were able to streamline our efforts and manage the company more efficiently. This division of labour enabled us to focus on our respective strengths, ultimately contributing to the success of our venture.
Overall, the gender of the co-founder may not be the determining factor in fundraising success, but having a supportive and capable team can certainly make a difference in navigating the challenges of entrepreneurship and securing investment.
How deeply has the funding winter affected your company’s fundraising and expansion plans?
The funding winter certainly presented challenges for our company, but we’re proud to say that we weathered the storm quite effectively. Even during periods of market recession and economic downturns, we continued to perform well, which garnered interest from several venture capitalists. However, during that time, we recognized that we weren’t quite ready for equity funding, so we opted for debt funding instead. We successfully secured debt funding both last year and the year before, which enabled us to sustain and even grow our operations despite the challenging economic conditions.
As for our expansion plans, the current economic scenario has posed some obstacles, particularly in terms of foreign expansion. With the market experiencing recessionary pressures and economic instability, expansion efforts have been hindered. However, we remain optimistic about the future and anticipate a rebound in the market. In the meantime, we’re actively strategising and adapting to overcome these challenges, with a focus on optimizing our operations and preparing for future growth opportunities. While expansion may be slower than initially planned, we’re committed to navigating through these challenges and emerging stronger on the other side.
What’s the fundraising outlook for 2024?
The fundraising outlook for 2024 appears cautiously optimistic, with several factors influencing the market dynamics. As we approach the US elections, there is anticipation that a change in leadership or policy may positively impact the market. Historically, the tech hiring landscape, which heavily influences our industry, has been affected by US market trends. Therefore, post-election shifts could potentially stimulate market activity and investor confidence.
However, despite the potential for positive changes, investors remain cautious and discerning in their funding decisions. The era of indiscriminate funding for startups seems to be waning, with investors now prioritizing companies with strong traction and compelling ideas. This trend is likely to continue, with investors being more selective in where they allocate their funds.
While the fundraising environment may not be as easygoing as in previous years, companies with solid traction and innovative ideas still have opportunities to secure funding. Startups need to demonstrate market viability and differentiate themselves to attract investor interest. Overall, while fundraising may remain challenging, there is optimism that post-election shifts and improving market conditions could lead to increased funding opportunities for deserving companies.
In your opinion, what are some of the most important factors that investors should consider when evaluating a startup, regardless of the founder’s gender?
I believe investors should prioritize certain key aspects when evaluating startups, regardless of the gender of the founder. Firstly, the traction and revenue of the startup are crucial indicators of its potential for success. Investors should look at how well the startup is performing in the market and its ability to generate revenue.
Annual recurring revenue (ARR) and monthly recurring revenue (MRR) are also important metrics to consider. These metrics provide insights into the stability and scalability of the startup’s business model, which are essential for long-term growth. Furthermore, investors should focus on the confidence and competence of the founder. Gender should not be a determining factor; instead, investors should assess the founder’s leadership abilities, vision, and understanding of the business and industry.
Market opportunity is another key consideration. Investors should evaluate the size of the market and the startup’s potential to capture a significant share of it. A strong product-market fit is essential, demonstrating that the startup’s product or service meets a genuine need in the market.
Lastly, the composition of the startup’s team is critical. Investors should assess the team’s experience, expertise, and ability to execute the business plan effectively. By prioritizing these factors, investors can make informed decisions and support startups with the greatest potential for success, regardless of the gender of the founder.
In the current environment, when funding will be more difficult to secure for most startups, could female founders find it tougher to raise capital?
I believe that the difficulties in securing funding are not exclusive to female founders. The challenges faced by startups in accessing capital are largely universal and stem from broader economic factors and investor sentiments. While biases may exist, I am optimistic that the investment landscape is evolving, and there is a growing recognition of the value and potential of startups led by women. Investors are increasingly focused on the merit of the business idea, the capabilities of the founding team, and the potential for growth and profitability rather than the gender of the founders.
As a female founder myself, I have not personally experienced significant bias in fundraising efforts. I firmly believe that success in securing capital depends more on factors such as the strength of the business proposition, execution capabilities, and market potential rather than the gender of the founders. With determination, resilience, and a compelling business plan, female founders can overcome any challenges they may encounter in raising capital and achieving their entrepreneurial goals.
What advice would you give other female entrepreneurs?
My advice to fellow female entrepreneurs would be to embrace confidence as your guiding principle. Confidence in yourself and your vision will serve as a powerful shield against doubts and negativity from others. Remember, it’s okay not to know everything; no one does. Instead, focus on surrounding yourself with talented individuals who excel in areas where you may have gaps in knowledge or expertise. Building a strong team of diverse talents will empower you to delegate tasks effectively and drive your business forward.
Additionally, never underestimate the value of networking and seeking mentorship from those who have walked a similar path before you. Learning from the experiences of others and leveraging their insights can provide invaluable guidance as you navigate the challenges of entrepreneurship.
Above all, believe in yourself and your abilities. Trust your instincts, stay resilient in the face of adversity, and never shy away from seizing opportunities to learn and grow. With confidence as your compass, there’s no limit to what you can achieve as a female entrepreneur.
