Most crowdfunding platforms fund individual ideas. And most organizations use microfinance to support entrepreneurs in the developing world.
One group of investors thinks both those techniques could Watch Mary Carey All Babe Network (2013)help elevate another overlooked group: female founders.
The group investing platform SheEO is connecting crowdfunding with microfinance to back five female-led startups a year. The name SheEO might bring to mind the failures of a few "feminist" CEOs, but this investment fund's ideas have enough potential to outstrip its branding.
"I don't want to put my capital into the same old dumb apps that don't do anything in the world."
"I don't want to put my capital into the same old dumb apps that don't do anything in the world," said SheEO founder Vicki Saunders. "I want to put my capital into female innovators who are strengthening our communities."
SheEO recruits 500 women to all contribute $1,100 each—or $550,000 total—to an investing fund. Their money is pooled together to loan to female founders at zero percent interest. The next year, another 500 women (repeats allowed) contribute $1,100 again. When companies pay back their loans within five years, the fund continues to grow.
SEE ALSO: This app will help you speak up—or shut up—during meetingsAt year three in 2017, SheEO has 15 portfolio companies and $1.5 million invested. The goal is to get to a $1 billion perpetual fund backed by 1 million investors (or activators, as SheEO calls them) and invested in 10,000 women-led ventures.
It's another way to back female founders in an environment where women only received 2.19 percent of venture-capital funding in 2016. The fund came up with another way for women entrepreneurs to raise money without navigating the pitfalls of male investors who don't understand their ideas or their market.
SheEO's model combines crowdfunding, in which small amounts of money are contributed by big groups of people, with strategies taken from established microfinance platforms like Kiva. Saunders, who has a long resume that includes running startups, taking a company public, and working with the World Economic Forum, envisions the model as something that could be repeated for groups besides female founders and outside tech.
SEE ALSO: 58% of men in tech say there are enough women in leadership roles, but women don't agreeIn developing the model, she drew on her experience raising funding through venture capitalists, through loans, from friends and family, through grants—basically every avenue except private equity. Saunders is traveling to Sydney, Australia next month to talk to the city about how her funding model works, she said.
The goal is to get to a $1 billion perpetual fund backed by 1 million investors.
"Everything we're doing is a mashup of lots of other things that have happened before," Saunders said. "When it gets to scale, it's going to be really interesting."
In this first iteration, the companies that get these $100,000 loans have to be earning between $50,000 and $1.5 million in revenue a year and be majority women-owned or women-led. So far, SheEO has funded companies working on artificial intelligence, hardware for people with disabilities, food, and education.
SEE ALSO: This venture capital fund wants investors as passionate as philanthropistsSaunders first tested out her idea for a new way to invest in Canada in 2015. The fund is now approaching round three and has expanded to the United States and New Zealand. Next year, the group plans to add investors in the Netherlands, Australia, and Mexico.
The women who sign up to contribute $1,100 include corporate executives, women working in politics, and more established entrepreneurs. The youngest investor is 14 and the oldest is 92.
It's only $1.5 million dollars on the way to its $1 billion goal, but everything is going as planned so far.
"It makes me crazy all these incredible female innovators have a hard time getting funded," Saunders said.
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