A funding network only supporting ventures led by women-identifying and non-binary entrepreneurs with almost a 100 percent success rate aims to disrupt traditional capital raising for good
Kiwi entrepreneur Lisa Booth started her Waikato-based food delivery social enterprise Kete Kai last year, after seeing a serious need for affordable food kits for people in lockdown.
The idea had been in the works for six years, as Booth’s ultimate goal was to end poverty by 2030 in Aotearoa. But what delayed the launch was access to funding.
“We got started last year because when Covid hit we thought the cheapest way, and the easiest way to feed people is through, like really great meal planning. But raising capital is the hardest thing,” Booth says.
Kete Kai collaborates with the University of Otago’s Human Nutrition department to create emergency meal kits to keep prices affordable.
“We scraped together cash to get through the year dipping into savings, but this year I raised about $100,000 from family and friends.
“I gave up my corporate career at the end of last year, because I really wanted to focus on this full time and realised I really needed support and to find a network of women because we are a minority in tech and leadership.”
Business veteran and co-founder of NZX-listed meal kit company My Food Bag Theresa Gattung says that, impressed by Booth’s social enterprise, she reached out to her on LinkedIn and encouraged her to apply for SheEO funding, a nonprofit venture capital organisation supporting women-identifying and non-binary entrepreneurs through interest-free loans and mentorship.
The business went on to become one of five startups to secure a five-year interest-free loan from a pool of $1.25 million gathered through donations by generous Kiwis looking to support female-led firms.
Gattung says while access to capital for female-led businesses was growing in New Zealand, with the likes of Icehouse Ventures creating the ArcAngels fund supporting only women-run companies, there was still a long way to go.
“Women still get tested more, and often asked ‘Will you be able to do this?’ ‘How are you going to manage that’. It’s a collective unconscious bias.”
In 2019, 2.8 percent of funding went to women-led startups, and last year that dropped to 2.3 percent, Crunchbase figures show.
“Our structures are set up to be biased against basically anyone who’s not a white male Harvard dropout.”
– Vicki Saunders, SheEO founder
Gattung brought the SheEO investment model to New Zealand four years ago after hearing Canadian founder Vicki Saunders speak about it at a conference.
Since 2017, the SheEO Aotearoa arm has raised $1.25 million from 1100 donors.
To be eligible for funding, businesses must meet be majority-owned and led by a cis or trans woman, non-binary, gender-fluid or gender non-conforming person, have revenue between $50,000 and $2m and work towards creating a company with positive social impact – following the UN Sustainability Goals.
At the beginning of every funding cycle, each donor puts forward $1100 in a fund to provide interest-free loans to five businesses.
Donors vote to select five winners from a shortlist of 10 companies they think should get interest-free loans and mentorship from the fund.
The pot refills as the entrepreneurs repay their loans.
Previous winners of SheEO funding include zero carbon drinks company Chia Sisters, period products company Hello Cup and recycled plastics packaging company Better Packaging.
According to SheEO’s 2020 impact report, the past 15 winners were exporting to 50 countries, had grown more than 100 jobs between them and were generating revenue of about $12m.
So far all but one company, a social enterprise, the network has supported have repaid their loans each quarter.
“You won’t get a venture portfolio with a 100 percent success rate but this is really close to that. We’re trusting women’s wisdom, not an expert panel,” Gattung says.
SheEO founder Vicki Saunders is a former venture capitalist who set up the new investment model to level the capital raising playing field for women.
“About 2 percent of investment capital goes to women, who make up 51 percent of the population. We still have a really long way to go before it’s even, I don’t think this is getting cleared in my lifetime,” Saunders says.
“Our structures are set up to be biased against basically anyone who’s not a white male Harvard dropout.”
She says there has been a lack of imagination on ways to invest differently, and she hopes SheEO can be an “experiment” for moving capital to those who have been marginalised.
“It’s showing people, this is possible, you can do things differently. We made this society up so we can change it too.”
Saunders, who spoke to Newsroom from Toronto, says businesses in North America are coming to terms with a major shift in the workforce. The record resignations month on month labelled the ‘great resignation’ is also changing the entrepreneurial landscape.
Saunders says Covid pushed workers into entrepreneurship and entrepreneurs into rethinking the kinds of businesses they want to run.
“This whole working 24/7 and always being on is completely exhausting, and Covid just pushed that right over the edge.”
She says over the past few years entrepreneurship had gained a toxic culture of celebrating work before health.
“I remember years ago, going to this event, and this sort of celebrated guy in a hoodie, stood up at the front and said, ‘How many people slept less than eight hours last night?’ And all these hands went up like it was some badge of honour.”
Saunders reckons over the past year more entrepreneurs are reconsidering their growth plans.
“Entrepreneurs are asking themselves do they really want to scale up? Maybe having a $5m turnover a year with 15 employees who are paid really well is what aligns better.
“We’re going to see a lot of different models of success, not just the one narrative.”
