How One Founder Overcame Bias

Even though Silk + Sonder had customer traction,

Meha Agrawal, its founder and CEO, got many nos—far more than her male counterparts—when raising her pre-seed round for her self-care and mental wellness brand for modern women.

“Forget all the dos and don’ts around fundraising for your pre-seed round,” she said. “Know your value proposition and define the investors who are attracted to it.” Then, research them and don’t be afraid to reach out without an introduction, she commented.

Despite having a promising career and satisfying social life, Agrawal had anxiety. “I was waking up every day feeling unfulfilled, overwhelmed, and burnt out,” she said. Things like dancing that generally gave her joy no longer did. “I’m Southeast Asian.” Agrawal checked the boxes that indicated she was successful, but she still felt anxious. To her friends, she looked like she had a good life. “They told me I was a source of negative energy…Sometimes you forget what your internal compass is telling you.”

Agrawal couldn’t put her finger on what was wrong. Therapy felt intimidating and coaching was expensive. So instead, she read many books about self-help, personal development, and positive psychology.

“There is science behind the effectiveness of journaling in alleviating anxiety and stress, increasing IQ and memory, and helping with trauma,”* she said. Using a technique called bullet journal, she put pen to paper. It’s a system that organizes scheduling, reminders, to-do lists, brainstorming, and other organizational tasks into a single notebook.

Combining all the stuff that she was learning, Agrawal developed an action-oriented productivity framework for herself. “When I saw how transformative bringing pen to paper was, I thought others might want the system, too,” she said.

In 2017, when she was a software engineer at Stitch Fix, she developed a notebook that was a guided monthly planner and journal subscription and started to sell Silk + Sonder online as a side project. She worked on it nights and weekends.

With the goal of learning skills that would help her be an effective CEO of a startup, Agrawal left Stitch Fix and joined Fueled, a design and development agency. There she learned tactical product skills that would help her build implementation processes as an early-stage CEO.

In 2019, she left Fueled and went full-time with Silk + Sonder. Up until then, Agrawal had bootstrapped the business. She had 1,000 subscribers in all 50 states and generated $15,000 per month in revenue. Though she was a solo founder, Agrawal didn’t want to take the entrepreneurial journey alone. She was accepted into the Tory Burch Fellows program and All Raise’s boot camp. The experts and peers she met through both programs became a sounding board, provided mentorship and shared resources.

Agrawal reached out to angels and micro venture capital firms to invest in her company. She got a few yeses and tons of nos. The nos were taking a toll on Agrawal’s confidence. Her male angel investors, who were also founders, pointed out that sexism was probably at play.

Potential investors asked her a lot more questions and did more due diligence on her than on male founders. This kind of bias toward female founders is consistent with research that Dana Kanze has done. She found that investors ask male founders questions related to promotion or gain and female founders questions related to prevention or loss. The different focus resulted in men raising five times as much as women. As a result, Silk + Sonder had a lot more traction than the startups of male founders raising pre-seed capital.

Many in the startup world say raising venture capital is a numbers game. The more VCs you talk to, the more likely you will find a few who will invest in your company. It was only when Agrawal developed an investor persona and focused on quality, not quantity, that she closed her pre-seed round.

Whether a founder or an executive, self-made people who connected with her story about struggling with anxiety were the most likely to invest in her startup. Agrawal researched who had this profile. She didn’t wait for referrals. She reached out by sending compelling emails. Success! Agrawal closed $500,000 pre-seed round for Silk + Sonder.

In 2020, Agrawal was accepted into 500 Startups, a top accelerator for early-stage founders. It provides scaling startups with education, mentorship, and financing. In addition, 500 Startups mentors and advisors provided her with insights into growth strategies. Her intention was not to raise money at its demo day but to build relationships with investors for when she needed money. A demo day showcases startups who just graduated from an accelerator program to investors and potential partners. With her pre-seed round, the money 500 Startups invested and revenue, she felt that she had enough money for a while. Then the Covid-19 crisis happened.

The American Psychiatric Association calls the Pandemic Trauma Stress Experience the “pandemic effect.” As the pandemic effect grew, customer interest in Silk + Sonder surged. Investors and prospective investors started asking if they could invest in the next round.

Silk + Sonder had already proven that there was a need to build an online community. Its minimum viable product (MVP) was a Facebook Group that was thriving. Having a community was a critical differentiator from the competition for the company. It was time to build something more robust and meet the surge in interest in affordable and practical mental wellness and self-care techniques brought about by the pandemic.

In the Spring of 2020, startup founders feared venture capital would dry up as it did during the 2007-2009 financial crisis and that raising money virtually versus face to face would be much more challenging. But, when an existing investor offered to lead the round, Agrawal put aside her reservations and raised a seed round.

“Sometimes, what appears to be an obstacle is a magical opportunity,” she said. It took all of one month to raise a $3.6 million seed round led by Redpoint Ventures — a pre-seed investor — with participation from Tim Kendall, Temp Ventures, and Firebolt Ventures. To date, the company has raised $4.2 million in funding.

How have you overcome obstacles to success in your venture?