For many startup founders, raising outside capital from investors is one of the hardest parts of launching a new business.

For Christina Stembel, founder and CEO of Farmgirl Flowers, it never happened.

“To date, I’ve received 104 no’s,” Stembel said of her experience trying to raise venture capital. “We’ve gotten three yes’s, but the terms were not great at all compared to what our competitors were getting. So I did not take it, did not move forward with it.”

But even without a single check from a venture capitalist – or even a college degree – Stembel built Farmgirl Flowers into a multimillion dollar e-commerce floral business.

Stembel, 42, launched Farmgirl Flowers out of her apartment in San Francisco in 2010. The idea for the business stemmed from her time planning events as director of alumni relations at Stanford Law School, and from her own dissatisfaction ordering and sending expensive, yet often wilting flowers to her mother in Indiana.

“It seemed like nobody was disrupting this space,” Stembel said during an interview as part of Yahoo Finance’s Breakouts series. “The latest innovation was in the mid '90s, so it seemed like the right time for me to do something.”

“Smartphones really changed the equation in flowers,” she added. “Now with smartphones, you take pictures of everything. You share it, and so what you see has to be what you get. And if it's not, younger consumers are not satisfied. And so that's what I found through research, and what I found just through testing and starting a company was younger consumers were really drawn to what I was doing.”

When Stembel first started her business, she did so with the cushion of just $49,000 of her own money, and a self-imposed timeline of two years to actualize her idea.

What Stembel created was a tightly curated menu of arrangements featuring whimsical flowers including anemones, poppies and calla lilies. Young people, Stembel said, “don’t want the red roses and baby’s breath” that were a mainstay of bouquets more established flower companies were selling.

A smaller array of options also helped the company cut down on waste.

“I can't provide flowers at the same price points as our competitors and provide better flowers, unless I moved some other lever. And so the lever that I found that I could move was waste,” Stembel said. “The industry standard is 40% waste. And I was like, well, if I can get that down to under 2%, could I provide flowers that cost a lot more money?”

Each arrangement is wrapped in burlap, and sourced either from local farmers around Northern California, or from suppliers brought on more recently from South America.

Now, in a typical week, Stembel said her team of more than 160 employees delivers some 6,000 to 8,000 bouquets across 48 states. For this year’s Valentine’s Day week – a time Stembel calls Farmgirl Flowers’ “Super Bowl” amid the holiday sales surge – she expects that number will have climbed to more than 30,000.

‘At least $10 million more’

Stembel’s business operates within the U.S. floriculture industry, a category including flowers, seeds and potted plants that brought in $34.8 billion in retail sales in 2019, according to the U.S. Bureau of Economic Analysis.

On the cut flowers side, the industry has been dominated by incumbent players like 1-800-Flowers.com (FLWRS), a public company that brought in $1.25 billion in revenue in 2019. Other e-commerce flower delivery startups with models similar to Farmgirl Flowers have also become more highly capitalized with the help of outside investors. The Bouqs Company, a privately held upstart, has raised $74 million in funding to date.

Others names have become a paragon for those that fail to maintain market share in a competitive landscape: The more than century-old floral delivery company FTD filed for bankruptcy in mid-2019.

Stembel brought in more than $30 million in revenue in 2019, after starting out doing $56,000 in sales her first year. But those results could have accelerated even faster with outside funding, Stembel said.

“Bootstrapping is so challenging for growth. We actually had to slow down our growth by 30% last year, because we couldn't afford the growth,” she said. “We couldn't afford the shipping subsidies on growth, which I mean, we have the demand there, which is not what CEOs want to do.”

She said shipping is the “number one expense” Farmgirl Flowers needs to minimize, especially as customers continually demand low-cost or free shipping from e-commerce players. Farmgirl Flowers still subsidizes shipping “by millions of dollars every year” so as not to scare off customers with high prices, Stembel said.

“So having the growth capital, instead of doing $32 million last year, I think we could have done at least $10 million more,” she said.

Venture dollars and female entrepreneurs

Stembel’s experience raising – and not raising – outside funds is one familiar to many women entrepreneurs. Just 3% of venture capital dollars went to female-founded start-up owners globally in 2019, according to data compiled by Crunchbase. Ten percent of dollars went to male/female co-founded companies, while the balance, 87%, went to male-founded startups.

The proportion of venture dollars allocated to female-founded startups has floundered even as the number of new businesses started by women has continued to grow. Twenty percent of global startups raising their first funding round in 2019 had at least one female founder, or about double the percentage from when Stembel began her business in 2010, according to CB Insights.

To be sure, Stembel herself acknowledged a small handful of opportunities to accept outside funding for Farmgirl Flowers, but under terms she chose to decline.

“I think there’s a lot of implicit bias. People trust people that look like them, which is why all the -isms exist,” Stembel said. “I don't think it's intentional. I don't think it's malicious.”

“Until we actually actively put some things in place that says like, ‘We're only going to invest in this many companies that don't have female founders,’ … Until we actually put tangible goals in place that have to be met on the venture, and private equity, and, you know, the capital side, I don't think it's going to happen naturally,” she said.

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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