Women and founders from underrepresented backgrounds refuse to wait for the venture capital (VC) industry to transform itself. Instead, they are taking proactive steps to address the existing disparities in investor behavior.

At Village Capital, where I work, we recently collaborated with the International Finance Corporation (IFC), academic researchers, and a consortium of partners to tackle the issues surrounding the evaluation of startups by investors. Drawing on our findings and extensive experience supporting over 100 underrepresented founders, here are some key insights:

1. Change Your Approach to Questions: During due diligence, investors often ask different types of questions to women-led and men-led startups. To counter this bias, founders can prepare growth-focused responses to risk-related questions. For instance, if asked about potential regulatory challenges, use the opportunity to highlight regulations that can lead to growth opportunities for your company.
2. Demonstrate Confidence and Readiness: Impressing potential investors requires confidence and readiness. Don’t shy away from discussing risks; instead, emphasize the opportunities that managing those risks presents. Being adept at risk management can set you apart.
3. Track and Communicate Strategy Evolution: Investors evaluate a founding team’s potential, which can be difficult to quantify. Combat reliance on gut instinct by tracking and clearly communicating how your strategy has improved over time. This demonstrates your ability to learn, adapt, and make meaningful progress.
4. Explore Alternative Funding: Consider moving beyond traditional venture capital financing. Non-equity options, such as grants, revenue-based financing, or loans, are gaining popularity. Explore a broader spectrum of funding options to suit your startup’s needs.
5. Leverage Networks: Seek out networks for underrepresented founders in your region. Connect with them to meet investors specifically interested in your demographic or sector. Leverage their bias in your favor.
6. Participate in Support Programs: Engage in startup support programs that can help refine your pitch, business model, and growth strategy. Avoid fundraising before you can clearly articulate your product’s value and potential for a financial return.

While these strategies can help women and underrepresented founders navigate bias and improve their chances of securing investment, the responsibility also lies with investors to reform a flawed funding system. Hiring a more diverse investment team and addressing evaluation processes that overlook women-led startups can significantly reduce bias in the industry. We anticipate a future where the funding landscape becomes more equitable.