When you sell your company, one of your concerns may be whether the acquiring company will carry on your vision for the brand. Will your values, practices, and priorities be maintained?
Much has been written about the power of purpose to attract, motivate, and retain employees. Purpose attracts like-minded customers, too. “Purpose-led brands have the potential to forge stronger customer relationships, which translates into more sales and greater customer loyalty,” writes Caroline Castrillon, a Forbes contributor.
Purpose can also attract the right company to acquire yours. This ensures that your brand will be carried forward with similar values.
Since 2015, Lisa Wang, CEO and cofounder of SheWorx, has been working to close the funding gap for female founders. SheWorx built a community of 20,000 female founders, hosted more than 300 events, provided skill-building workshops on fundraising, marketing, and management, and helped founders raise more than $50 million in funding. (I was an advisor to the company)
“All this capital [$131 billion was invested in venture capital in 2018, according to PitchBook-NVCA Venture Monitor] is being managed by a small, homogeneous group,” said Wang. A vast majority — 89% of all US-based investment decision-makers at $25 million-plus venture funds are men, according to All Raise. No surprise only 12% of venture funding goes to teams with female founders.
“I’ve been very bearish about venture capital as a funding source,” said Wang. As bad as it is for women in general, black women, who represent 14% of the population and 30% of net new women-owned firms receive less than 4% of venture capital going to women. Latinas represent 17% of the population, 22% of net new women-owned firms and receive less than 2% of venture capital going to women. Data is from Quick Take: Women of Color in the United States by Catalyst, American Express 2018 State of Women-Owned Businesses* and DianeProject 2018, digitalundivided.
The reality is only 1% of companies raise venture capital. Wang likes the concept of Regulation Crowdfunding (Reg CF). Since May 2016, small businesses could raise up to a $1 million over 12 months from average Americans. With Reg CF, entrepreneurs aren’t limited to raising money from the 8 million accredited investors (wealthy people). They can raise money from the 240 million regular Joe and Jane investors. “I believe that in a world where anyone can fund anyone, more ideas will get off the ground,” said Wang. “Potential consumers and the community know the value and usefulness of a product or service. VCs are focused on who is going to be the next billion dollar company and on exponential growth over sustainable growth,”
Though not a huge funding source, yet, Reg CF is growing. In 2018, it increased 54% from $71.2 million in 2017 to $109.3 million in 2018, according to Crowd Capital Advisors. Its average success rate increased from 59% in 2017 to 64% in 2018 versus 7% for venture capital. An average successful campaign took less than 3 months. Raising a first round of angel or venture capital can take 12 months. "...numbers pale to Reg CF’s potential, especially when compared to countries like the UK, where investment crowdfunding has become a more mainstream investment method," writes Locavesting Staff.
Wang met Kenrick Nguyen, CEO and Cofounder of Republic, a Reg CF platform at a startup event. Republic also provides a fundraising solution in the crypto space.
They had heard of each other and respected what the other had created. “I really liked that Republic has a big focus on diversity,” she said. “There’s an over-glamorization of venture capital,” said Wang. Many founders don’t understand the potential pitfalls of venture capital, such as a focus on growth at all costs and losing control of your company.
They talked about a potential collaboration. Ultimately, the two felt combining companies would be more powerful than SheWorx as a solo operation. Wang will be staying on as an advisor to Republic. The SheWorx brand will be managed by Bianca Caban, head of partnership at Republic.
Republic will relaunch the SheWorx brand in New York City and San Francisco, then roll it out to other cities that are rising entrepreneurial hubs for female founders, such as Austin and Nashville. It is looking for locals to manage the community. The brand is in good hands. Caban’s values are aligned with those of Wang and Nguyen. “Talent is evenly distributed [gender, race, ethnicity, geography, etc.], opportunity, and capital are not,” said Caban. Women control the majority of household spending. “There’s a m***ive opportunity for products and services created and marketed by them,” said Caban. Women know what women want.
“Fundraising is an opaque process,” said Caban. “There’s real value to providing the kind of education that SheWorx provides through its monthly breakfast series and annual summit.” To celebrate the acquisition, Republic has launched the SheWorx Equity Crowdfunding Challenge. Three female founders will receive comprehensive coaching through their campaigns plus additional resources. Applications close on August 15, 2019.
Reg CF can provide funding to build an early version of your product/service or as bridge between financing rounds. Founders may still want angel and venture funding. Recently introduced, Republic Labs is an investment advisory service, which allows it to make introductions to accredited investors and venture capitalists.
Wang will be taking what she learned building the SheWorx platform and applying it to the social good space. Look for an announcement in the fall.
Before you sell your company, how will you ensure your vision for the company will live on?
*The author of the article’s company, Ventureneer, is a co-author of the report.