SheEO founder Vicki Saunders.
Vicki Saunders has been to enough pitch competitions in her 25 years as an entrepreneur to know that the spirit of such events—the winner-take-all mentality and the need to contort your business to fit investors’ ideals—was off-putting to her. She suspected plenty of other women might feel the same.
So when she had to chance to allocate $500,000 between five female-lead businesses last winter, Saunders, the founder of SheEO, did something different: she asked the women how they wanted the money to be split.
Such consensus-based decision-making is a pillar of Radical Generosity, a campaign that SheEO launched last year. The campaign raised $1,000 each from 500 women; that pool was then split to invest in five women-led businesses. The initiative is meant to help close the funding gap for women entrepreneurs—who receive less than 3% of venture funding—and, ultimately, offer a different model by which investors can support ventures.
The reasons women don’t get funded are complex, but a main contributor is the lack of women controlling the purse strings. In recent years, there have been a number of initiatives encouraging women to become investors—a solution Saunders says is misguided. It’s not that we need more female participation in the current system, she says; it’s that we need a new system altogether.
“I really think everything is broken,” she says. “This world wasn’t made for us. We weren’t at the table to design it, so it’s no surprise it doesn’t work for us.”
The biggest problem with the status quo investment models, says Saunders, is that they tend to penalize certain qualities common in women. “Most people look at the way women run businesses as problematic,” she says. “They get to profitability quickly; that’s considered a bad thing. They are capital efficient; that’s considered a bad thing. It’s insane.” Moreover, capital tends to court high-risk ventures with potential to “win the marketplace.” “That leaves 90-plus percent of the economy starving for capital because everyone’s trying to chase a unicorn,” Saunders notes.
By contrast, SheEO supports the kinds of companies that are attractive to women business owners, investors, and consumers—primarily ventures that have potential for social change.
“It’s not a pure growth play,” says Madeleine Shaw, co-founder of Vancouver-based Lunapads. “Every single one of the businesses [in the SheEO program] is motivated by profound social impact.” In fact, it’s one of the questions investors (who selected which five ventures to fund) were asked: “Is this business making the world a better place?”
For Lunapads, the answer was a resounding “yes.” The company, which has been around since 1999, makes washable pads and underwear for menstrual and bladder leakage needs—a venture that champions environmental sustainability and provides access to an essential commodity that can be hard to come by in certain developing countries.
For Shaw, the reason for joining SheEO was two-fold. “I’m all over anything that’s going to change the game for women entrepreneurs,” she says. “Especially if it’s innovative and has that sisters-doing-it-for-themselves kind of thing.” The second reason was that Shaw and her business partner, Suzanne Siemens, were in talks with Target about distributing their products in 200 stores across the U.S. If the deal went through, they would need funding to ramp up production, and fast.
Skipper Otto, another Vancouver-based venture in the program, needed funding for a fish processing facility. The company runs a seafood co-op and supports local, small scale fishers by selling community members shares of their catches at the beginning of the fishing season. They had been self-funding for six years, packaging fish on the fly out of whatever kitchen they could rent that week. An outsider in the business world, Sonia Strobel, the company’s co-founder and CEO, was at a loss for how to secure funding—until a colleague recommended SheEO.
“I really suffered from this imposter syndrome,” says Strobel, a former teacher. “I kept thinking, I’m not really a business person, why would anyone want to invest in me?—the kind of internal dialogue a lot of women listen to.”
But that feeling dissipated soon after meeting the other SheEO venture leaders. Stobel recalls walking into the farmhouse in southern Ontario where the women first met—the vibe more cozy retreat than stuffy leadership conference. There, the women spent two days getting to know each other and their businesses, through workshops, coaching and exercises. At the end of the weekend, Saunder and the two other mentors left the women sequestered in the house to divide the funds, with just two rules to consider: everyone had to get something, and it couldn’t be split evenly. It took eight hours to come to an agreement—one that, the women decided, would garner the biggest overall impact while ensuring that each venture had the resources—be it funding, a new business strategy, or growth plan—to fulfil their goals.
“I wanted to create a very honouring space for women to be themselves and to create their own path,” says Saunders. “We tell our entrepreneurs when we invest in them what they have to do, what their milestones are. This is the opposite. We’re saying we care what happens, but we trust you enough to literally leave the room.”
Nearly year later, and Skipper Otto and Lunapads have each been able to meet their business goals thanks to the campaign. Strobel is in talks with the federal government to open a processing plant on Department of Fisheries and Oceans land, and has already tapped back into the SheEO network for more investments. Shaw and Siemens secured their deal with Target, and had the funding they needed to scale up quickly.
The program has paid dividends for the women who’ve participated. But building a critical mass of female investors is an ambitious feat that requires a major culture shift, which is proving to be a painfully slow process. In fact, when Saunders originally conceived the program, she aimed to get 1,000 women to invest, but rallied just half as many.
Still, Radical Generosity is showing promise of becoming a larger movement. By March, two more cohorts will have gone through the program, while 110 regions around the world have applied to replicate the model. Saunders’ goal is to be in a thousand regions by 2020, with a million investors, and a billion dollars in funding for ten thousand entrepreneurs. The end goal, however, is to change the culture around how investors (Saunders prefers the term “activators”) support businesses. “It’s not just our capital that needs to be activated; it’s our networks, our buying power, our expertise,” she says. “All of these things together, activating women on behalf of other women, that will change the world.”
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