Female entrepreneur seeks $1 million venture fund to spur startups
Group aims to get 1,000 women to donate $1,000 toward new venture capital fund
A new all-female crowdfunding initiative aims to make it easier for women entrepreneurs to raise money and get the support they need to build their businesses.
The project called Radical Generosity, launched this week, is trying to recruit 1,000 Canadian women willing to chip in $1,000 each to create a $1 million pool of venture capital.
Female entrepreneurs will then vie for the money and for the mentorship and buying power of the group that agreed to back them, with 10 projects to eventually get funding.
Vicki Saunders, founder of the Toronto group SheEO, said the venture could create a new model for funding startup businesses.
"The challenge we're trying to solve is female entrepreneurs have been underfinanced and under supported over the years and we've been looking for a creative solution to address this," Saunders said in an interview with CBC's Metro Morning.
Saunders, herself an entrepreneur, says only about four per cent of venture capital goes to female entrepreneurs, a reflection of the fact that most venture capitalists are men and have a different approach to business than women, she said.
Hard to get support
"Not as many women start businesses that want to be billion-dollar unicorns we're all obsessed with. We are very capital efficient and we get to market very quickly and then we get stuck. It's very hard to get funding," Saunders said. A "unicorn" is a term used by venture capitalists to denote fast-growing businesses that hit $1 billion in value.
She gives the example of Spanx founder Sara Blakely, who approached multiple North Carolina mill owners trying to get one to make her new kind of hosiery before she found one who said 'Yes.'
"They always asked the same three questions: 'And you are? And you are representing? And you are financially backed by?' When I answered Sara Blakely to all three, most of them sent me away, not to mention they thought the idea 'made no sense, and would never sell,'" Blakely said on her website.
"Two weeks later I received a call from a mill owner who said he 'decided to help make my crazy idea.' When asked why he had the change of heart, he said, 'I have two daughters.' Turns out they didn't think the idea was crazy at all."
Saunders said she believes women will understand the potential of the kinds of businesses other women create.
Who can apply?
"Women make 80 per cent of the purchasing decisions out there. I think this is an opportunity for us to consider the kinds of companies we want to be supporting and then put our buying power behind them," Saunders said.
She said any female-led startup with $50,000 in revenue can apply, using a one-minute video explaining their business idea.
The 1,000 women who contribute money will rank the applications and there will be a vote on the top 25.
And while 10 businesses will qualify — they won't get equal amounts. Instead, mentors from the 1,000 Radical Generosity backers will advise them on how to solve problems before the money is divvied up.
"Helping people be better leaders and build meaningful businesses is something almost every woman we meet wants to do. We want to see if a female-only experience creates a pull for more women to get involved," she said.
Saunders sees the venture capital model as scalable. The first 10 winners get an interest-free loan for five years, but as they pay it back, their money goes toward rolling out similar crowd-funding campaigns across Canada and internationally.
The SheEO group has ambitious goals, including rolling out the model at a city level in 2016, with 1000 women in Vancouver, in Toronto, or in Chicago.
"The winner-takes-all model is broken," Saunders said. "We need to try something new."