Having established that negotiating skills are paramount for women to attract venture capital in order to lead high growth companies, two questions remain – why do they need these skills, and what are the skills.
First the why. Carol Frohlinger, JD, managing director of Negotiating Women, explains that there is an uneven playing field for women because of second-generation gender bias. She challenged me to close my eyes and think of a successful entrepreneur — I said Bill Gates. Then she asked to think of a top-tier CEO – I thought of Jack Welsh. She said, “I rest my case; the point is that people think of men when they think of successful entrepreneurs and business leaders.”
And, her case is this: Men (and many women!) expect women to behave in certain ways and to fulfill certain roles. Leading companies and negotiating deals aren’t among them. Those expectations are based on stereotypes — the same biases that color interactions with venture capital and private equity investors. Just like first-generation gender bias is much rarer today than it was years ago (of course lawsuits helped speed that process along!), so will second-generation bias diminish. But it will likely take a couple of generations. In the meantime, what can women do?
Carol teaches women how to deal with it, and she shared a few pearls from her book, “Her Place at the Table,” with me:
- Strategic introductions. Having a shared respected business colleague to make the initial contact and vouch for you is critical and does much more than increase the likelihood of getting a meeting. It also imparts good will and favorable disposition toward you. So, even if you are human and make a couple of missteps, you are afforded some slack based on the relationship with the mutual contact.
- Sweat the details. Sorry to say, but men are forgiven oversights and errors, women are not. Women are viewed as detail-oriented. If a man misses a detail, no harm, no foul; if a woman misses a detail, a red flag goes up for people on the other side of the table. Sweat the small stuff (use the latest market data, not last quarter’s; don’t have misspellings; make sure your slide builds are in sequence, etc.) so that it doesn’t become big stuff.
- Preparation. Women need to be ultra-prepared for meetings and interactions with investors. Great slides and a cogent pitch are a given; the preparation that Carol is talking about is due diligence on every level. She recommends finding out as much about the person in advance by reaching out to shared contacts and focusing on things (professional and personal) over which a strong connection can be made. Carol calls this “planning for the irrational” because people make irrational decisions. If decisions were made solely on the slides, pitch and business plan, women would not be at a disadvantage.
- Adaptability and flexibility. Meetings never go according to plan, so expect it and be prepared to adapt and roll with it. Whereas men are forgiven for trying to control their environment and perhaps even viewed as strong leaders, women are not. Women need to use the dynamic landscape as an opportunity to reach the investor on another level. So, don’t be a slave to the planned pitch — know your material so well that you can leverage twists and turns to your benefit, rather than try to straighten the path by force.
- Go to the balcony. To reset at a tough point in the negotiation, get up from the table for a cup of coffee, take a drink of water or look out the window. When you return to the table, things by definition will be different than when you left . Allowing this natural and normal wrinkle to reset the discussion is better for women than a forced change because it does not result in a breach of stereotype and expectation.
- Better your BATNA — that is to say, your Best Alternative To a Negotiated Agreement. The better your alternatives, in the event that the present negotiation does not go well, the better you will be able to negotiate. It is always best to raise money for example, when you don’t need money and to partner well in advance of your launch. When you have no other reasonable alternatives, you lose negotiating power and you no longer have the most important card in your hand — the ability to walk away.
The uneven playing field won’t be fixed overnight. So, women have two choices: Cryopreserve themselves for 47 years until the second-generation bias is just a sorry footnote in history, or deal with it.
Carol says to deal with it by being informed and understanding the terrain.
Joseph V. Gulfo, MD, MBA, is the author of “Innovation Breakdown: How the FDA and Wall Street Cripple Medical Advances” and CEO of Breakthrough Medical Innovations, a team of biopharma and medtech consultants. An Inc.com contributor, he also teaches graduate cancer biology and business and entrepreneurship classes and maintains an educational cancer biology blog. Dr. Gulfo received his MD from University of Medicine and Dentistry of New Jersey, and his MBA from Seton Hall University.