A new funding initiative for female entrepreneurs provided five startup companies a chance to battle it out in the boardroom with $500,000 on the table.
The result wasn't what you see on Dragon's Den – but rather a collaborative process that saw each company walk away with a percentage of funds in their pocket.
The initiative – called "Radical Generosity" – is led by SheEO, a Toronto-based group that supports female-led ventures. Launched last summer, the campaign had an initial goal of seeking out 1,000 professional women to donate $1,000 each, resulting in a $1-million funding pool to be loaned out to female led-ventures.
In addition to raising funds, the campaign requested female entrepreneurs to submit proposals on why their company would be a good fit to receive funding. The final network of 500 donors fell short of the campaign goal but still raised a pool of $500,000 and over 240 proposals from entrepreneurs were submitted.
The donors include a broad mix of female professionals from various sectors such as manufacturing, mining, financial and legal, as well as retirees and entrepreneurs, says SheEO founder Vicki Saunders.
Despite only reaching half of the target, Ms. Saunders says the campaign was a huge success in raising awareness around the inadequacies in funding for female-led ventures and the company will continue to launch a second campaign this September.
"While women are starting businesses at twice the pace of men, venture capital funds less than seven per cent of female-led ventures," says Ms. Saunders. "After seeing how difficult it can be for female entrepreneurs to receive funding, it was obvious the industry needed a radical new way of supporting these women."
"We are over the moon with the 500 women who donated and now all it will take is for those women to invite one friend to participate and we can reach 1,000," Ms. Saunders says. "We started this campaign with no marketing budget and worked from word of mouth so we believe this initiative is going to continue to grow and will expand to five or six cities across the country."
For now, five Canadian companies have been named the first recipients of Radical Generosity. They were selected last November by an online voting process by the 500 donors. The finalists will receive a zero-per-cent interest loan for five years, starting in March. The finalists also receive mentor coaching, retreats and workshops during the year, also provided by the donors.
While each finalist differs in its business models – from reusable food wraps to a local fishery to a mobile app developer for people with autism – all submissions were required to come from social impact companies.
When it comes to the division of the $500,000, there was one catch – the finalists had to pitch their financial needs to one another and collectively decide how to divide the pool of money. The two parameters to the negotiations are they can't give all the money to one venture and they cannot divide it equally.
"Women are more likely to spend a weekend together and then provide everyone with the same amount," says Ms. Saunders.
The negotiations took place last weekend during a two-day retreat. After an eight-hour table discussion, the money was divided among the five ventures – with payouts ranging from 14 per cent to 24 per cent. Collectively – with the help of the funding they received – the five companies have combined projected sales of $2.5-million.
"The amount that everyone gets doesn't reflect the impact that it will have on each individual company," says Ilana Ben-Ari, founder and CEO of Twenty One Toys. "It's about the sum of ourselves as a whole and the idea that we are able to to create a nurturing network and collaborative environment for each other. We made sure that everyone was able to walk away with a much stronger business – both in terms of the immediate needs as well as the long-term effects of having this network of 500 women."
Similar to a corporate boardroom environment, entrepreneurs had to disclose company financials, projected revenue and their ability to repay the loan back into the fund.
"I wouldn't say I was overly surprised that all the companies got a share of the funds," says Julie Barker-Merz, president, BMO InvestorLine, one of the strategic partners of SheEO. "The group really took a collaborative and supportive approach to how the funds would be divided. Additionally, making the link between the amount each got to potential future revenue helped to ensure an objective assessment and standard."
The five finalists:
Toni Desrosiers, Abeego Designs Inc.
Suzanne Siemens, Madeleine Shaw, Lunapads International Products Ltd.
Nadia Hamilton, Magnusmode
Sonia Strobel, Skipper Otto's Community Supported Fishery
Ilana Ben-Ari, Twenty One Toys