SheEO bridges divide for female entrepreneurs
Canadian financing community is now catching fire in the U.S.,
Fans of the HBO comedy series Silicon Valley know Monica Hall as the venture capitalist with the heart of gold, who helps the show’s geeky protagonists go from bored programmers to startup superstars. Now life is imitating art. The actress who portrays Monica, Amanda Crew, who is from Langley, B.C., has signed up to help women entrepreneurs grow their businesses through SheEO, a Canadian financing community that’s now catching fire in the United States.
Despite her role as a young, confident professional in venture investing, Crew says “I don’t know anything about the tech world. But I know women have proven they’re more than capable of running their own companies — yet there is still this huge divide in how well their companies are funded. They need more capital, but they’re not getting it because they’re women.”
Vicki Saunders, the Torontobased serial entrepreneur who founded SheEO (rhymes with CEO), says the entire financial model is broken. While women are founding more than 50 per cent of businesses today, their businesses receive only five per cent to 10 per cent of risk capital allotted to growth companies. The divide is easily explained. VCs are always swinging for the fences, looking to invest in high-growth businesses that will give them 1,000 per cent return — because they know that nine out of 10 investments always fall short. Women-owned firms, according to the research, rarely launch with such lofty ambitions and thus tend to be easily overlooked by starry-eyed (mostly male) VCs.
Saunders’ model, dubbed Radical Generosity, turns the whole thing on its head. Her goal is to identify groups of 500 to 1,000 concerned, affluent women who want to support other women entrepreneurs, and will “invest” $1,100 each in a portfolio of five worthy, growth-oriented startups. Structured as a low-interest loan and divided among the five contenders as the owners themselves see fit, the proceeds will enable the ventures to fund product development, talent recruitment and other key projects that spur growth. But there’s more to it than money. The entrepreneurs report monthly to their investors, and they’re invited to make one “ask” per month — perhaps for help with strategic direction, sales contacts or more capital. So the investors also become mentors and coaches. “This is the old-boys’ network we never had,” Saunders says.
These investors, known as activators, will never see their money again. Instead, it will stay in the ecosystem, theoretically forever. As the companies pay back 20 per cent of their loans annually, those funds are reinvested to support another new company every year. At the same time, Saunders
Note: On Dec. 14, SheEO released the names of 25 Canadian and 25 U.S. companies that are shortlisted for funding in 2017. Activator applications are being accepted until Dec. 31. For more information, visit sheeo.world.
expects her activator communities will create new funds every year, creating a growing and infinitely renewable pool of capital.
In March, SheEO’s first 500 Canadian activators made their first five investments, in firms ranging from fair-trade fishing (Vancouver-based Skipper Otto) to an app that helps people with special needs communicate more clearly (Waterloo-based Magnusmode). As Saunders toured the U.S. west coast, she was able to boast that these initial winners were exceeding revenue expectations by 60 per cent.
It was a feature story in Inc. magazine about Saunders’ quest that caught the eye of Amanda Crew. Killing time at Los Angeles International Airport prior to flying to Vancouver to see her family, Crew couldn’t resist the headline: “Meet the women who are hacking venture capital.” “I bought the magazine and read the article about SheEO,” says Crew.
“Then I went to their website and saw they had an event coming up in Santa Monica, but it was closed. So I asked one of my agents, ‘Can you get me in the meeting?’”
At the meeting, in a posh Morgan Stanley office, Crew says she felt a bit intimidated. Everyone else had a name tag that included their title and company name; hers just had her name. When other guests asked what she did, she replied, “I’m an actor” — which doesn’t carry quite the weight in L.A. as it might in some other cities. But after hearing Saunders outline her vision, Crew caught up with her and said she wanted in. Aside from her cheque, Crew hopes she can now help increase awareness of women entrepreneurs and the capital shortage. Asked if she would also be joining Canada’s activator group, Crew said she’d be open to that, too.
Saunders, whose goal is to have activator groups in 1,000 cities around the world (her next targets are New York, London, the Netherlands and India), hopes that attracting more influencers such as Crew will help SheEO go viral sooner. Saunders is in a hurry to make the future happen — and Crew is ready to help: “I think what they’re doing is important, and kind of revolutionary.”