women in VC

2 female Houston entrepreneurs discuss challenges women face during fundraising

Kim Raath, CEO of Topl, and Leslie Goldman, general partner at The Artemis Fund, identified three challenges that female entrepreneurs face while going through the fundraising process. Photos courtesy

It's estimated that women make up only around 10 percent of decision makers in venture capital firms in the United States, and women-led companies only receive of a fraction of venture capital invested. And, stats aside, female entrepreneurs continue to face obstacles in the process that their male counterparts don't always share.

Kim Raath — co-founder and CEO of Topl, a Houston-based blockchain startup — and Leslie Goldman — general partner and co-founder of The Artemis Fund — discussed some of these obstacles at a virtual fireside chat for Dallas Startup Week. Here are the three challenges women face during fundraising, as Raath and Goldman discussed.

Balancing being realist with optimism

It's almost a chiche at this point — yet it still holds a great deal of truth — that women tend to be more honest than men when it comes to applying for jobs, for instance. Goldman says she's seen it plenty of times, especially when she was involved in corporate recruiting at one point in her career. Raath and Goldman agreed, women want to check off all the boxes on a requirements list.

"Men would apply if they could check just one box," Goldman says. "Women tend to be more realistic."

This trait, while noble, can be a disadvantage as it translates to the fundraising process.

Navigating unconscious bias

Raath says she's no stranger to discrimination for being a woman. In the chat, she tells a story of when she was a girl and the woman's track event she was supposed to run was canceled. She had her heart set on getting to nationals, so her father lobbied for her to get a chance to run in the boy's race. Eventually, they let her and she came in second place.

She continued to observe moments like this throughout her schooling, especially when she started studying male-dominated studies like economics and statistics — Raath now has a master's and a Ph.D from Rice University. When recently raising money for Topl's latest round, her observational and statistical mind picked up on something. Raath explains that there are two types of questions a VC might ask you — preventative vs. promotional. An example she gives for each is:

  • Preventative: "How many daily users do you have?"
  • Promotional: "How do you look to acquire users?"

"About three months in, I started realizing that I'm constantly getting these preventative questions. So, I did a little research," Raath says, explaining that she found that women are more likely to get these preventative questions. "Now, every preventative question I got, I started answering with a promotional answer."

It's the same unconscious bias as how a young male entrepreneur might be considered, "young and promising," while a woman with the same resume would be considered, "young and inexperienced."

Creating a supportive network

Raath and Goldman discussed the importance of women surrounding themselves with supportive networks made up of both women and men. On one hand, it's key to have fellow female entrepreneurs or investors who have been in your shoes before or whom you can give advice to — Raath says she created "woke woman wine nights" with her interns this summer.

On the other hand, having men in your network who can act as advocates — like Raath's father was as well as her male co-founders whom she says are great supporters — is crucial too.

"I have been surrounded by some amazing male counterparts," Raath says. "That's the other side of this is finding male champions."

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Building Houston

 
 

Cheers Health has expanded its product line as it evolves as a wellness-focused brand. Photo courtesy of Cheers

Houston-based startup Cheers first got a wave of brand devotees after it was passed over by investors on Shark Tank in 2018. In the years since, Cheers secured an impressive investment, launched new products, and became a staple hangover cure for customers. When the COVID-19 pandemic disrupted businesses, the company rose to the occasion and experienced its first profitable year as drinking and wellness habits changed across America.

Cheers initially started its company under the name Thrive+ with a hangover-friendly pill that promised to minimize the not-so-fun side effects that come after a night out. The capsules support the liver by replacing lost vitamins, reduce GABAa rebound and lower the alcohol-induced acetaldehyde toxicity levels in the body. The company's legacy product complemented social calendars and nights on the town, providing next day relief.

With COVID-19 lockdowns and social distancing measures, the days of pub crawls and social events were numbered. Cheers founder Brooks Powell saw the massive behavior change in people consuming alcohol, and leaned into his vision of becoming more than just a hangover cure but an "alcohol-related health company," he says.

When the pandemic first hit, Powell and his team noticed an immediate dip in sales — a relatable story for businesses in the grips of COVID-19.

"There is a three day period where we went from having the best month in company history to the worst month in company history, over a 72 hour stretch," he remarks.

He soon called an emergency board meeting and rattled off worst-case "doomsday" scenarios, he says.

"Thankfully, we never had to do any of these strategies because, ultimately, the team was able to rally around the new positioning for the brand which was far more focused on alcohol-related health," he says.

"We found that a lot less people were getting hangovers during 2020, because generally when you binge drink, you tend to binge drink with other people," he explains.

He noticed that health became an important focus for people, some who began to drink less due to the lack of social gatherings. On the contrary, some consumers began to drink more to fill the idle time.

According to a JAMA Network report, there was a 54 percent increase in national sales of alcohol for the week stay-at-home orders began last March, as compared to the year prior.

"All of a sudden, you have all of these people who probably aren't binge drinking but they're just frequently consuming alcohol. Their drinks per week are shooting up, and they're worried about liver health," explains Powell.

Outside of day-after support, Cheers leaned into its long-term health products to help drinkers consume alcohol in a healthier way. Cheers Restore, a dissolvable powder consumers can mix into their water, rehydrates the body by optimizing sodium and glucose molecules.

For continued support, Cheers Protect is a daily supplement designed to increase glutathione — an antioxidant that plays a key role in liver detoxification — and support overall liver health. Cheers Protect, which was launched in 2019, became a focus for the company as they pivoted its brand strategy and marketing to accommodate consumer behavior.

"The Cheers brand is just trying to reflect the mission statement, which is bringing people together through promoting fun, responsible and health-conscious alcohol consumption," says Powell. "It fits with our vision statement, which is a world where everyone can enjoy alcohol throughout a long, healthy and happy lifetime,."

At the close of 2020, Cheers had generated $10.4 million in revenue and over $1.7m in profit — its first profitable year since launch.

During the brand's mission to stay afloat during the pandemic, the Cheers team was also laying the groundwork for its entry into the retail space. When Powell launched the company during his junior year at Princeton University, bringing Cheers to brick-and-mortar stores had always been a goal. He envisioned liquor and grocery stores where Cheers was sold next to alcohol as a complementary item. "It's like getting sunscreen before going to the beach, they kind of go hand in hand," he says.

"When we spoke with retailers, specifically bars and liquor stores, what we learned is that a lot of these places were hesitant to put pills near alcohol," he says. Wanting an attractive and accessible mode of alcohol-support, the Cheers team created the Cheers Restore beverage.

Utilizing the technology Cheers developed with Princeton University researchers, the Cheers Restore beverage incorporates the benefits of the pill in a liquid, sugar-free form. The company states that its in-vivo study found that the drink is up to 19 times more bioavailable than pure dihydromyricetin (DHM), a Japanese raisin tree extract found in Cheers products and other hangover-related cures.

"What we figured out is that if you combine DHM — our main ingredient — with something called capric acid, which is an extract from coconut oil, the bioavailability shoots way up," says Powell. He notes the unique taste profile and the "creaminess" capric acid provides. "Now you have this lightly carbonated, zero-sugar, lemon sherbert, essentially liver support, hangover beverage that tastes great in 12 ounces and can mix with alcohol," he explains.

The Cheers Restore beverage is already hitting the Houston-area, where its found a home on menus at Present Company. The company has also run promotions with Houston hangouts like Memorial Trail Ice House, Drift, and The Powder Keg.

Currently, the beverage is only available in retail capacity and cannot be ordered on the Cheers website. As Powell focuses on expanding Cheers Restore beverage presence in the region, he welcomes the idea of expanding nationally in the future to come. While eager customers await the drink's national availability, they can actively invest in Cheers through the company's recently-launched online public offering.

Though repivoting a company and launching a new product is exciting, the process did not come without its caveats and stressors. While Cheers profited as a business in 2020, the staff and its founder weren't immune to the struggles of COVID-19.

"I think 2020 was the first year that it really became real for me that Cheers is far more than just some sort of alcohol-related health brand and its products," says Powell. "Cheers is really its employees and everything that goes into being a successful, durable company that people essentially bet their careers on and their family's well-being on and so forth," he continues.

"It really does weigh on you in a different way that it's never weighed on you before," says Powell, describing the stress of the pandemic. The experience was "enlightening," he says, and he wants others to know it's not embarrassing to need help.

"There is no lack of great leaders out there that at long periods of their life they needed help in some way," he says. "For me that was 2020 and being in the grinder and feeling the stress of the unknown and all of that, but it could happen to anyone," he continues.

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