Social Venture Network, a non-profit comprised of socially conscious business leaders, wants to inject a bit of diversity into today’s pool of (mostly white, mostly male) entrepreneurs.
Yesterday, the 25 year-old organization launched a crowdfunding campaign on Indiegogo to help women and minority entrepreneurs get their companies off the ground.
The odds are stacked against entrepreneurs who happen not to be white males: women-led social enterprise startups are 40 percent less likely to be funded than their male-led counterparts, even though they generate 15 percent greater revenues, according to an Emory University study. And minority-led companies are 35 percent less likely to receive venture capital financing than non-minority-led companies, it continues.
“Investors tend to go with what they know and look in familiar circles for investment opportunities,” SVN executive director Deb Nelson told VentureBeat. “Women and people of color often get missed.”
To counteract this funding bias, SVN provides scholarships and support services to women and minority entrepreneurs. Its Indiegogo campaign will help fund those initiatives.
“Every $1,000 we raise provides a scholarship to another emerging entrepreneur,” said Nelson.
By opting for Indiegogo’s “flexible funding” option, SVN will receive the donated funds even if it doesn’t reach its $25,000 goal — but that’s unlikely given the campaign’s early traction. In just one day, it’s garnered just over $10,000 in pledges from 22 funders (an impressive $454 average per pledge).
Some of SVN’s more prominent members include Eileen Fisher (of Eileen Fisher Inc.), Rajasvini Bhansali (International Development Exchange), and Ben Cohen and Jerry Greenfield (Ben & Jerry’s).
To learn more about the organization and its crowdfunding campaign, check out the Q&A below with SVN executive director Deb Nelson.
VentureBeat: What was the motivation to launch the campaign?
Nelson: If there was a classified ad for impact investors and entrepreneurs, it might read something like this: “You, smart, talented and hungry with a dream to change the world and the track record to prove you can do it. Me: Eager to put my money where my values are, but have been burned before. Willing to invest in a new business model, but looking for a sure thing.” As a result, investors tend to go with what they know and look in familiar circles for investment opportunities. Women and people of color often get missed.
SVN is motivated to include these entrepreneurs and other promising next generation-types into its super effective network of sustainable business pioneers. We know that giving them the connections they need to succeed will benefit not only them but the entire sustainable business movement, and our mission is to see that it grows.
VB: How will the funds be used? What’s the breakdown? What happens if the campaign vastly exceeds its $25,000 goal?
Nelson: The funds will be used to fund scholarships to SVN future conferences and other support services for women entrepreneurs and entrepreneurs of color. Every $1,000 we raise provides a scholarship to another emerging entrepreneur. At these events, scholarship recipients are paired with some of the luminaries of the responsible business movement and impact investors. If we raise more funding, we can invite more as-yet undiscovered entrepreneurs to attend SVN conferences and better connect them to the human and social resources they need to grow their businesses.
VB: How important is crowdfunding for entrepreneurs today — specifically, for women and minorities?
Nelson: It can be important for many reasons. While it’s not going to entirely fund a startup, it may be enough to show an investor that an idea has traction, or to launch a new product. Our campaign is specifically to raise money to provide scholarships to targeted groups of entrepreneurs so that they may get integrated into the SVN community. We know that that little bit of exposure can help get them going as we’ve helped launch thousands of entrepreneurs over our 26-year history. We also know that crowdfunding is most successful when entrepreneurs have a real world network to ask.
For example, Back to the Roots is an example of an SVN member company that did both crowdfunding and early stage capital. Cofounders Nikhil Arora and Alejandro Velez used crowdfunding to launch their first product (grow-at-home mushroom kits) and came to an SVN conference on scholarship, where they met movers, shakers, and investors who helped propel their business to the next stage of growth.
We’ve also heard from people who research such things, although we haven’t yet seen the data, that women do better overall with crowdfunding campaigns than their male counterparts. Crowdfunding is a new, exciting way to raise seed funding for prototyping and sell products, but access to early stage capital (venture capital and angel investors) are still important to scale businesses.