What started as a whisper — women funding women entrepreneurs — is becoming a drumbeat and, because women now control 51% ($14 trillion) of personal wealth in the U.S., they are not only helping other women, they are also changing the funding landscape.
By 2020, American women will control roughly $22 trillion, according to Financial Concerns of Women, a report by BMO Wealth Institute. And they are using it to create new financing options to solve the funding challenges of other women. Which also means they are using that financial power to solve market problems men have missed.
Anecdotal evidence from Harness the Power of the Purse: Winning Women Investors, by Andrea Turner Moffitt suggests women are keenly interested in investing in women entrepreneurs because of the personal connection they feel. Turner Moffitt is also co-founder of Plum Alley Investments, which invests in the next generation of world-class gender-diverse companies
When it comes to personal connection, a little means a lot. Small amounts of money loaned to a women entrepreneur via Kiva provides interest-free loans of up to $10,000 in the United States. You can also provide $1,100 (includes a $100 processing fee) to SheEO’s Radical Generosity initiative, which provides interest-free loans that are paid back over five years. Loans can be for as much as hundreds of thousands of dollars. In the U.S., your investment is a tax deduction.
With SheEO Radical Generosity, money from 500 women (activators) is pooled together and loaned to five women-led ventures chosen by the activators. These companies make a social impact and have export potential. The five women-led ventures determine how they want to divy up the $500,000 among them.
Like angel investors, the activators also provide their expertise, connections and marketing support to help grow the companies. “It’s an act of radical generosity,” said Vicki Saunders, founder of SheEO. “My goal is to reach 1 million activators, 10,000 women-led ventures and create a $1 billion perpetual fund by 2026.”
Women aren’t obsessed with finding the nearly impossible to find unicorn (a tech startup company that reaches a $1 billion dollar market valuation), said Saunders. Women activators are interested in providing financing to cash-starved companies that are quick to profitability, led by women who are highly efficient with their capital. Importantly, research has found that it’s not just the experts that can pick winners, crowds can too.
Since launching the initiative in 2015, the 1,500 activators have loaned money to 15 women-led companies and 100% are paying back their loans on time. By the end of the year, Saunders wants to ratchet those numbers up to 4,000 activators, lending to 40 women-led companies.
What kind of companies are being funded by SheEO Radical Generosity?
- Barbara Alink is a Dutch designer, architect and humanitarian. She created Alinker for her aging mother who swore she would never use a walker or a wheelchair. Alink created a device that allows people with disabilities to stay active and engaged in life, and maintain their independence. Since the loan, Alink has received a $1 million from China to produce Alinker for them.
- Toni Desrosiers invented breathable food wrap to replace plastic food wrap. While store-bought plastic is free of the plasticizers, or phthalates, which could leach toxins, no manufacturers recommend using their product in the cooking process. In addition, plastic wrap doesn't breathe so food spoils faster. Abeego is beeswax wrap that helps food last longer and is biodegradable. It’s also reusable. Over the past 16 months, Abeego's revenue has grown 500%.
"SheEO gave me posture; being validated by 500 women allowed me to believe in myself in a way that has me standing 10 feet taller,” said Desrosiers . “You realize you have five partners and a team of 500."
Add to this option investing in Community Development Financial Institutions (CDFIs) that earn more than a savings account and invest in women-owned businesses and investing in a holding company that invests in companies that serve women as consumers, employees or investors while you earn quarterly dividends. See what I mean about women disrupting the way entrepreneurs are funded?
SheEO and Kiva are two examples of disruptive funders who recognize that women want more than ROI, as the Charles Schwab Modern Wealth Index reported. "[Women] lean more into things that money can't buy," said Hibah Shariff, senior public relations manager at Charles Schwab. That bodes well both for the economy and for social good.
Women are more likely than men to own impact investments (18% versus 10% respectively) and have an interest in adding them to their portfolio (54% versus 51%), according to 2017 Insights on Wealth and Worth by U.S. Trust.
Will you apply for SheEO loan or become an activator like I did.
