By Jill Richmond
Let's be clear about one thing, Vicki Saunders, the CEO of SheEO
, is a force to be reckoned with. She's acerbic, shrewd and quick to combat any naysayers around the realities of a broken and untenable funding environment for women. Furthermore, she is tired of capital being aggregated into the slimmest percentage of hands. In fact, her favorite mantra is "everything is broken, what a great time to be alive." Receive an email from her and it will end with that signature. She isn't wrong.
According to an American Express 2016 report
, there are over 11.3 million women-owned businesses in the U.S. that employ nearly 9 million people and generate over $1.6 trillion in revenues. Revenues among these women-owned businesses have increased 35% since 2007 as compared to 27% among all U.S. firms. Despite this, 4% of venture capital funding goes to women entrepreneurs. Among startups, 38% of new businesses are started by women, but only between 2-6%
of these founders receive venture capital. Therefore, it shouldn't surprise you that 86%
of venture-funded businesses have no women in management positions. There are many theories as to why this is the case, but Pitchbook notes that only 9.7% of partners at VC firms are women
. As Ethan Mollick, management professor at Wharton, says: "There is a problem here, and 'leaning in' is not enough to solve it." The only way to tackle this is to change the culture of how we perceive and invest in women-led startups. There is also emerging data
to show that women investors better understand women-led Ventures and women-led Ventures funded by women perform better.
Knowing this, Saunders set out to entirely re-engineer a broken system for women entrepreneurs from the ground up with a primary vision SheEO likes to call "radical generosity." While it sounds terribly poetic, almost too poetic to be pragmatic, Saunders is a seasoned pragmatist. SheEO is a two-decade long initiative for her and extrapolates the best in breed from many funding models to micro-credit and crowdfunding structures. The thrust of SheEo is not merely asking the question, "what is wrong with funding structures for women, but what is preventing women from receiving the support they often need to start, run and scale their businesses?" All of which dovetail Saunder's own experience having co-founded and run four ventures herself in Europe, Toronto and Silicon Valley-Zazengo, KidsNRG/The NRG Group (which went public on the Toronto Stock Exchange in 2000) and Impactnation.
A Need for More Inclusive Models?
Here are some of the facts that are the baseline for Saunders' model:
1) Models of capital distribution reward few rock stars and bias to exclude nascent ideas and true early stage innovation as well as the expansion of small-medium sized businesses.
2) Women outsource financial decisions and are risk averse
3) 85% of women keep businesses under $1mm ARR
Given those figures, Saunders has built SheEO around a system of key acupuncture points which include: education by way of individual micro-networks of what Saunders calls "activators" or investors, finance and better storytelling through the graduation of successful companies and the reverberation of success through an active supportive network of women. In July 2015 SheEO launched a call for #radicalgenerosity to women across Canada and 500 women stepped up and committed $1,000 each to create a pool of capital of $500,000. The capital raised was distributed to five selected SheEOs in the form of 0% interest loans.
For Saunders, it is much more about the role of the women "activators." An "activator" is considered one of the 1,000 women that commit $1,000 per city, but for Saunders it is the "activator's" social capital, spiritual capital and networks. Another words, she is expecting women to be active participants in the companies that are part of the cohort they invest in. Some of this includes operational support in addition to opening up their networks of distribution deals or buyers. Essentially, these are introductions that include everything from legal support to new clients.
The first pilot of five companies dividing $500,000 among each other in Canada is already outperforming growth expectations and are repaying their loans and are prepared to develop the networks necessary for follow on or next rounds of seed funding.
While the original support for building the SheEO team was supplemented by Bank Of Montreal, BMO Senior Vice President, Julie Barker-Merz explained how she managed to build an "activator" network of 80 women executives within BMO prepared to put their own money into the first cohort. While she admits that one of the "greatest barriers for an "activator" is still connected to the financial commitment", she believes that both SheEO and BMO are using this experiment to understand which obstacles need to be removed from the entrepreneur and from the "activator." Ultimately re-educating around a uniquely different model which is both angel and philanthropic with no expectation of a direct monetary return.
The SheEO team believe the money is a secondary factor to the networks. In speaking with two of five of the first founders in the first cohort there are some compelling statistics but none which have me convinced that is truly the case. Ilana Ben-Ari, Founder Empathy Toys
. They design toys and workshops to teach empathy, failure
, and other 21st century skills in schools and offices worldwide. Ben-Ari told me that with "a portion of the loan they were able to go into production early, for their fourth production run." Their Empathy Toys
have been ethically mass manufactured, and delivered to over 45 countries. Using The funds from SheEO was the seed capital that enabled them to double their order, start early, and avoid running out of stock before-the death knell for any company and certainly theirs. That said, 10% of their new clients have come from referrals in the SheEO "activator" community ranging from the banking sector and insurance, through to school boards and universities.
Toni Abeego, CEO of Abeego
-an eco-friendly beeswax seal was able to utilize the loan to completely re-brand and double their online sales in one quarter. Abeego also noted that the "activator" network made several supplier introductions which added to a 30% reduction in the cost of their primary materials.
Saunders' ambitious plan is to take this model and roll it out, city-by-city, over the next five years with the goal of getting one million women committing $1,000 each by 2020 with a billion dollars of capital possibilities.
Saunders claims to be turning away a lot of VC interest at the moment and determined not to run the hard sell with her women "activators" in each city, but she has found this is a patient game of helping to educate them around what it means to be #radicallygenerous.
While SheEo is currently operating in four regions/cities: Canada, Los Angeles, San Francisco and Colorado, Saunders intends for SheEo to be nationwide at the end of 2017
with the beginning of a large European and Asian
presence. It is certainly exciting to watch her trailblaze with her hypothesis and sense of certainty in a new model of funding for women and watch it unfold in each city.
is a two-time founder, Marketing and Innovation Strategist. Follow her on Twitter
Article originally posted at Forbes.com