How A Black Female Founder Persevered To Raise VC For A Canadian Cybersecurity Startup

Claiming your place in the VC world as a Black female founder is no easy feat. Despite her struggles, Claudette McGowan persevered to raise nearly $5 million for her cybersecurity firm, Protexxa. She built on the relationships she made in the banking industry, and 60% of the investors on her cap table are women. The one Black VC firm in Canada, BKR, is her lead investor. Export Development Canada, the government agency, is also an investor.

The opportunity is enormous. Cyber threats have mushroomed. The cybersecurity market is a staggering $1.5 trillion to $2.0 trillion, according to McKinsey. Protexxa is a B2B SaaS cybersecurity platform that leverages artificial intelligence (AI) to rapidly identify, evaluate, predict, and resolve cyber issues.

Her Poetry Reflects Her Challenges and Tenacity

A founder with two decades of experience in technology and tech information security with two banks should have been able to raise money for a cybersecurity startup easily. That wasn’t the case.

McGowan, CEO and founder at Protexxa, wrote a poem about her experience. It sums up the experience many underrepresented founders face when raising funding and what it takes to succeed.

A Real Yes

First, you said it was a yes

And then it was a no

When you pulled your support

Did you think you’d stop the show?

“For my entire career, I didn’t see anybody that looked like me in meetings,” said McGowan. “I felt like an outlier.” That feeling followed her when she struck out on her own to raise VC for her cybersecurity startup, Protexxa.

After months of answering VCs’ questions, McGowan would be told you’re profitable, you’ve got this great pedigree and background, and you’ve got an outstanding team, but the answer is no.

You see when you said no

I heard go!

You say I move too fast

I think you move too slow

“It [Protexxa] feels too good to be true.” said one VC. “That’s the one that sat with me because it was the company [VC] I’d given the most to,” said McGowan. “They seemed to be all in, so I shared some secrets about what we’re planning. But they just kept bringing another person and another person to every meeting.”

They even asked her to hop on the phone to discuss their questions while on vacation. Then came, “We’re not even sure why we’re saying no, but it’s just something,” said the VC.

There are 5.18 billion internet users globally, according to Statista. They all face cyber threats.

The word no has powers

The word no devours

The word no breaks towers

The word no kills flowers

“I’m a woman of a certain vintage; I can take a punch,” said McGowan. But someone young might not have the fortitude. Imagine the good ideas that have gone to waste!

Venture capital is the lifeblood of a scaling tech startup. In these harsh market conditions, unrepresented founders, in particular, must have an extra dose of grit and determination to raise money.

“It’s not the no that bothers me,” said McGowan. “It’s the yes, no.” She felt that she had been strung along. Writing the poem was like therapy for her.

What seed can grow

Without H20?

So I accept your no

You must have a reason

With the support and encouragement of her family, McGowan kept going. She joined Venture Lab, an accelerator; C100, a global community of Canadians in Tech; and MaRS Discovery District, which supports Canada’s most promising startups. She attended conferences like Collision, a Toronto conference which brings together the people and companies redefining tech, and Elevate, a tech festival for Canadian innovators. Business owners who are part of business organizations, such as trade associations or chambers of commerce, are more likely to be successful in getting funding.

Lessons Learned

Ask people in the ecosystem for their insights and referrals. Other founders shared how they handled specific situations or an investor’s reputation. Her investors, and even those who turned her down as an investment opportunity, made introductions.

Identify the decision-makers. This was critical and enlightening. The initial assumption was that it was the chief risk officer. It turns out that it is the chief information security officer and the CEO.

Show-don’t-tell. It’s hard to visualize a cybersecurity platform that gives your company a cyber hygiene score and then recommends how to improve it. A CEO of a billion-dollar company was dragged to a Protexxa demonstration by his wife. He wrote McGowan a check that night.

Have customers. Customers are a proof point for VCs. They wanted to interview them to better understand how Protexxa was meeting their needs.

Know when to dig in your heels. It’s no secret that the fundraising climate for startups has chilled. Valuations have dropped. “By the time I had my term sheet and my lead investor, people were challenging the company’s valuation and trying to negotiate me down,” she sighed. “I stood firm.” She had signed a multi-million dollar contract, so she knew her value.

Support for McGowan has come from both men and women. “I’ve had many people put their neck out for me,” she emphasized. She is particularly grateful to those who say, “You’re not right for me, but let me make an introduction to so and so.”

Whether it’s hospitals, corporations, grocery stores, or schools, organizations are getting hacked and don’t have playbooks, tools, or processes. That drove McGowan’s decision to hold out for the valuation she was asking.

I’m not your flower

This ain’t our season

I ask another and another

And someone gives a real yes

They support me, they get me

Finally… success.

When you face obstacles, what gives you the strength to carry on?