Vicki Saunders

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Forget unicorns: the ladies are coming

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Unicorns? Not so much: our businesses have better odds of succeeding. SheEO founder Vicki, with Radical Generosity Top 5 cohort: Suzanne, Sonia, Ilana, Toni, Madeleine and Nadia, February 2016, Toronto.

As small business owners, we sometimes feel a bit neglected in a world that seems to prefer big things: it seems like the tide is finally starting to turn, at least when it comes to recognizing the value and promise of women entrepreneurs.

A recent article in the Toronto Star about the SheEO Radical Generosity fund spells it out: the idea of women supporting women by paying it forward is creating a new model for sustainable economic development not by looking for “unicorns” (startups valued at >$1 billion), but rather by investing in small, women-led ventures.

The article profiles our Radical Generosity sister, Twenty-One Toys founder Ilana Ben-Ari, and extensively quotes SheEO founder Vicki Saunders, an experienced entrepreneur who started the new initiative as an antidote to the startling gender imbalance in venture funding. Ilana’s venture checks many of today’s buzzword boxes: it’s innovative, creative and disruptive, and yet she has had to personally bootstrap its entire startup.

Twenty-One Toys, Lunapads, Magnusmode, Skipper Ottos’s CSF and Abeego form the 2016 Top 5 cohort, and met in February to decide how the $500,000 fund was to be distributed among the group. We are now acting on our plans to grow our businesses, and anticipate collectively growing our revenue by $2.5 million in the next 12 months.

Why the women entrepreneur focus? Turns out that it’s about more than feminist politics: it’s what makes the most sense. Let’s take a look at some statistics that support the claim that today’s biggest and best opportunity for economic growth is companies that are, ironically, chronically underfunded.

Quoting from Vicki’s September 2015 Globe and Mail editorial: “98% of our economy is made up of small- and medium-sized businesses. Fewer than 1,200 companies in this country have more than 500 employees. Big is not the norm.

Investors don’t focus on supporting and growing small– and medium-sized businesses because they aren’t “sexy.” They don’t “scale.” They aren’t in “hot” markets. And they don’t get outsized returns. However, a loan to a solid business to hire a few more people to grow sales is far more sustainable and likely to have a return than betting it all on a new idea with an unproven entrepreneur in a crowded space.”

A February 2016 New York times article that details the experience of a woman entrepreneur’s trials trying to raise capital for her tech startup in Silicon Valley echoes Vicki’s position. A damning 2014 study published by the National Academy of Sciences cited in the article found that 68% of investors who listened to identical pitches delivered in male and female voices chose to finance the male-voiced pitch.

Vicki’s editorial concludes: “Last year, two-thirds of businesses in Canada were started by women. New data have emerged showing that if female entrepreneurs were financed to the same degree as their male counterparts, we’d create six million jobs in North America in the next five years. This is a huge economic engine we haven’t even tried to engage.”

One of the SheEO mantras is “The ladies are coming”: forget unicorns – let’s level the playing field for women entrepreneurs!

SheEO Radical Generosity cohort Top 5 Canada 2016

The SheEO effect

“Collaboration is the new competition.” – SheEO Radical Generosity fund Top 5 cohort

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Our SheEO Radical Generosity cohort: (L-R) entrepreneurs Nadia Hamilton, Ilana Ben-Ari, Suzanne, Sonia Strobel, Madeleine, Toni Desrosiers, Coaches MJ Ryan and Loren Walsh, and Founder Vicki Saunders. Toronto, February 22, 2016. Photo credit: Dahlia Katz.

We have just returned from one of the most remarkable experiences in our entire Lunapads journey. In addition to being recognized as being among Canada’s most impactful women entrepreneurs, we have seen and experienced what we believe is the future of sustainable business funding.

Lunapads was ranked in the top 5 from a field of over 230 applicant companies from across the country by 500 “Activators”: women who each contributed $1,000 (including Suzanne and I) to create the SheEO Radical Generosity fund of $500,000, distributed as interest-free, 5 year term loans.

The Toronto-based initiative is the brainchild of serial tech entrepreneur Vicki Saunders. Rather than being a “Venture Capital for women” approach, the fund offers a holistic, arguably more impactful model, harnessing the power of the Activators, effectively bringing each selected venture 500 new customers and advocates.

Vicki’s experience in the Silicon Valley investment world was of a deeply flawed model that is leading to unrealistic valuations – and human expectations – of “unicorn” companies that do not reflect the reality of the vast majority of business startups (twice as many of which are started by women as men, incongruously). Less than 4% of this type of investment is given to women-owned companies in any case.

Some other notable things about why Radical Generosity is so groundbreaking include its process: the $500,000 was allocated, not by a panel of judges or “experts”, but rather by consensus among the 5 ventures. The only rules that we were given were that the funds could not be divided evenly, and that the funds could not all be given to one venture.

Video credit: Kristina Ruddick

Rather than an adversarial, “winner take all” approach, where the venture with the most capital is seen as the most successful, the ventures chose (in the face of considerable media pressure, I might add) not to disclose the final amounts, choosing instead to highlight the combined estimated increase in revenue for the entire group in the next 12 months ($2.5 million).

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“Locked in a boardroom?” Not!

What the process looked like in practice was what made it truly incredible. We were sequestered, not in a downtown boardroom, but rather in a historic country farmhouse an hour away from Toronto.

In the company of two expert Coach facilitators as well as Vicki herself, we were led in a series of deeply thoughtful, heart-led conversations and exercises for a full day and a half prior to the commencement of the final deliberations. We were fed delicious organic food and encouraged to share our personal stories about who we are as people and the “whys” behind our business ventures.

The result is that it would be harder to find a more closely bonded group of ass-kicking entrepreneurs, fiercely committed to one another’s – and the fund’s – success. It is an amazing example of “big picture thinking” that we believe sets an example of true sustainability. “Not for ourselves alone” was a refrain that kept playing in my head throughout the weekend.

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Photo credit: Dahlia Katz

And then there was a party! It was so amazing to be celebrated, especially alongside such inspiring sister-entrepreneurs. The “purple carpet” event was held in a historic Fermentation room (Vicki noted in her speech that it was a perfect metaphor for the growth of the Radical Generosity network) and attended by over 200 Activators. In that room, we felt the overwhelming power of women truly excited about our businesses and eager to offer ways to help us achieve our goals. We are not only now supported by a new model of funding, but we now have 500 new customers, experts and champions of our business. How awesome is that?!

The only disappointment in the entire experience was the lack of depth in media coverage (ie: the Globe and Mail – online only , Techvibes,  and a tiny blurb on News 1130 and in the Vancouver Sun).  Given the innovative funding model and degree of impact SheEO is creating, we strongly feel this kind of story deserves more attention.

We are incredibly proud of this milestone and so grateful for the support of our staff, customers, friends and family that has brought us to this point. To Vicki and the SheEO team, the Activators, Ilana, Nadia, Toni and Sonia (more on these women and their businesses soon), and all SheEOs past, present and future: thank you from the bottom of our hearts. We will do you proud!