One hundred and seventeen times, that's the number of times I've been rejected for funding while pitching my business, soona, to banks, angel investors and venture capitalists.
When you start a company, one of the most ubiquitous pieces of advice you'll receive is "learn how to have thick skin." It's common advice, because it's true. Every successful entrepreneur learns to grow comfortable in a suit of armor the way most millennials have embraced athleisure as the new business casual. It's the only way to put up with the inevitable deluge of rejection that comes in service to the pursuit of a dream.
And yet, being rejected 117 times barely registers an emotional reaction for me compared to the handful of times my gender played a role in raising money for my business.
When my cofounder, Hayley Anderson, and I first dreamed up our business, we thought about the potential of our shared dreams. Soona studios in every major city! Brands being able to get professional video the same day they shot it! The internet being eradicated of stock content! Every day, we suit up to pursue our mission to make professional photo and video affordable for all with our $39 photos and $93 video clips. We opened our first studio store in Denver in the spring of 2019 and launched our second in Minneapolis that summer. Our online-only product, soona anytime, gives brands access to our services through our real-time, remote platform.
And while building soona has been one of the most amazing journeys in my career, there are lots of things that can go wrong in a startup.
Pictured: Elizabeth Giorgi on set
In the winter of 2019 as we were preparing to launch and in the thick of early fundraising conversations, I found myself crying on the floor of our AirBnB between fundraising meetings. The cause? I was being harassed and had just received a lewd text from a potential investor.
I wish I could tell you this was the first and only instance of sexual harassment in my entrepreneurial career, but it wasn't. However, it was the catalyzing event that inspired me to think differently about the ways in which we could advance feminism while pursuing our startup. And one of those became the Candor Clause.
The Candor Clause is an open-source legal disclosure that is to be included in the Representations and Warranties portion of a financing agreement. It's a simple two paragraphs, not much longer than a tweet. But it is a powerful 150 words. The clause outlines that all parties are required to disclose any instances of sexual harassment, sexual assault or otherwise gender-based discrimination. Failure to disclose provides the business the ability to buy the other party out of the company at the price they paid during the initial financing.
This is important for two reasons:
1. It Generates Radical Conversations Between Founders and Investors
With this disclosure requirement, we can have an open, candid dialogue as founders and investors about how we want to do business at the very earliest stage of the relationship. In introducing the clause to our lead investors, we were able to share very clearly what we value as founders and our shared expectations about diversity, equality and general fairness. It also provides a clear opportunity to create advocates and champions out of investors, the vast majority of whom are men. Each of these conversations is an invitation to do better, be better and treat each other better.
2. It Makes it Clear to Perpetrators That There Will be Consequences
When someone is a victim in these types of situations, the onus is often on the victim to take on the legal, financial and personal strain of resolving it. By requiring a disclosure at the very earliest part of a business relationship, we are creating a clear standard. This is critical for removing barriers to a possible resolution in the future. By including the Candor Clause, it also sets a tone for how we will approach any future issues.
This year, of the companies that receive venture capital backing, only 2% of those companies will have a female founder. This is a statistic that has held strong for 13 years. Meanwhile, women are founding companies at record rates. The math doesn't add up, and it's critical that we start taking action from all sides.
Modern feminism is a commercial opportunity. Hashtag enamel pins and sloganed t-shirts targeted to women on Instagram are a step toward advancing the cause. But let's get real: we aren't going to get anywhere real with feminism as a fashion statement. It's my belief that making meaningful progress is the necessary though unglamorous work that no one pays attention to.
The opportunities to change the world are in the innocuous moments during the transactions of modern life and business. To paint a picture: the fight for equality might just be about getting the right words in the fine print.
The day I received a term sheet from our first venture investors, I remember feeling validated in a way that erased all the rejections that came before it. Much of the journey of building your business is surviving the process.
But what I recall even more clearly about that day was the way my stomach turned when the fund partner and I sat down for a chat to discuss the terms. I knew I had to bring up the Candor Clause. It was non-standard legal language. It was going to come up with the attorneys—might as well get ahead of it.
"Yeah, no duh. It's a great idea. We can include it. Now, onto timeline," he said.
It was, and still is, the only time in my life when being told "no duh," felt so good.
Great business ideas eventually find the right backers. Great founders eventually find their circle of cheerleaders. And it's now my firm conviction that great investors are realizing that the best investments are in people of character and bravery.
Today, when people ask me what impact the Candor Clause has had on my ability to raise funding, I am proud to say that it 100% has not impacted my ability to attract investment interest. And what it has prevented has been well worth it. I haven't been harassed or treated improperly as a woman during this round of financing.
The Candor Clause is open source and available for download at candorclause.com. Those interested in using it should visit our website for step-by-step instructions on how to navigate the inclusion of the clause with investors and legal advisors.
WRITTEN BY
Elizabeth Giorgi