Why do people assume your business is a nonprofit?

Why do people assume your business is a nonprofit?

I have a client that I’ve been helping to raise money from investors.  It is a for-profit corporation that is successful and profitable.  I am not exaggerating when I say that at least half of the people that I tell about this business assume it is a nonprofit.  The CEO of this company has told me that a lot of people she talks to assume her company is a nonprofit.  People don’t even ask if it is a for-profit or a nonprofit – they say, “oh, how can it raise money from investors given that it is a nonprofit?”

I have no idea why this is!  Here are some possible reasons:

  1. The CEO is an African American lesbian and when people picture a for-profit business owner they don’t picture someone that looks like her.
  2. The company is highly mission-driven and working in a space that many nonprofits work in as well.
  3. Because I am a woman, people assume that my clients must be nonprofits (because a lot of people associate women with nonprofits rather than for-profits).

Has anyone ever assumed your for-profit business was a nonprofit?  This has actually happened to many of my clients that are led by women.

I should mention that the people who assume these businesses are nonprofits are just as likely to be women as men.

What do you think this is about?!?!?

Please note that I don’t believe there is anything wrong with being a nonprofit and I have helped several nonprofits raise money from investors.

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5 Unconventional Tips for Talking to Investors

5 Unconventional Tips for Talking to Investors

1. Start the conversation by asking questions like

What’s important to you when making an investment?

What’s frustrating to you about the investment opportunities that are available?

2. Really listen!  Imagine what it feels like to be them. Do a lot more listening than talking.

3. Show empathy – almost everyone has pain and frustration about money.

4. Next, ONLY if it feels like a good fit, share your passion and vision, authentically and from the heart.

5. If the investor seems to be intrigued by the vision you shared, only then provide the nitty gritty details – your company’s milestones achieved, your plans for growth, how much you’re raising, etc.

BONUS TIP: Enjoy the process!

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What stage of business is the right time to raise money?

What stage of business is the right time to raise money?

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Bridging the Gap Between Philanthropy and Impact Investing

Bridging the Gap Between Philanthropy and Impact Investing

Many philanthropists would like to dip a toe into impact investing, but they’re not sure where to start.  Below are a few organizations and projects that combine the best of nonprofits and social enterprise.  Many can accept both donations and investments (not all are currently accepting investments).

  1. Impact Assets – make a tax-deductible charitable donation and they will invest your donation in the social enterprise of your choice – investment returns grow the pool of investable assets
  2. SheEO – make a tax-deductible charitable donation and then help choose women entrepreneurs that will receive investment out of the the donated funds
  3. Force for Good Fund – 501(c)(3) investment fund offering eight-year revenue sharing notes – investing in social enterprises with a focus on women and people of color
  4. Economic Development and Financing Corporation – a nonprofit CDFI in Mendocino that raised money from the general public in California to invest in a start up wool mill
  5. RSF Social Finance – nonprofit offering investment notes to the general public – considered very low risk
  6. Nia House, a school in Berkeley – offered notes to the families it serves to build an addition; used community notes to leverage grants and institutional loans
  7. Beneficial State Bank is a for-profit bank whose stock is owned by a nonprofit foundation – bank profits go to the foundation so that it can make community grants – a great place to park your money!

Please share your examples!

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I Can’t Keep Silent about this Anymore: Women and Capital Raising

I Can’t Keep Silent about this Anymore: Women and Capital Raising

I started helping mission-driven entrepreneurs raise capital almost ten years ago.  My clients have collectively raised almost $20 million, with amounts ranging from $150,000 to $4 million.

About two years ago, I was compiling a list of the clients that I had helped to raise money.  At that time, I could honestly say that every client that I had worked through the whole process with (i.e. if I excluded those that changed their minds and didn’t complete the process) had met their fundraising goals.  Some took longer than others, but all of them had eventually reached their goals.

Looking at the list, I noticed something strange: almost all of my clients were companies led by men.

I decided I wanted to start focusing on helping women entrepreneurs raise capital.  So that is what I have been doing for the last two years.  And here is the dirty little secret that I don’t like to talk about: I am not seeing the same success rate that I saw with my male clients.

Yes, some of my female clients are raising money, but I am seeing them take longer and struggle more than my male clients.

What is going on?  I have done some research, as well as paid attention to what women entrepreneurs say about raising money.  I’ve also reflected on my own experience raising money from investors three times in the last five years.  Here are a few data points that are consistent with my observations:

  • Men in the United States are about 25% more confident than women in their capability to start a business.[1]
  • Men apply for a job when they meet only 60% of the qualifications, but women apply only if they meet 100% of them.[2]
  • Women are 70% more likely to say “I didn’t want to put myself out there if I was likely to fail.”[3]
  • Investors prefer pitches presented by male entrepreneurs compared with pitches made by female entrepreneurs, even when the content of the pitch is the same.[4]

Based on my own experience and talking to hundreds of women entrepreneurs, I think all of these phenomena contribute to the problem.  Women entrepreneurs have less confidence about asking for money, feel they have to have a perfect business before they can ask, and would rather not ask if they think they will get a no.  To make matters worse, when they do ask, the deck is stacked against them because of gender bias.

Another problem is that the fundraising strategy that gets the most hype is the Silicon Valley model which requires super-fast growth at all costs, which just doesn’t fit what many women entrepreneurs want for their businesses and their lives.  They often don’t know that there are many ways to raise capital.

I am really tired of seeing women having to work harder to raise money!

So I am partnering with Amrita Sankar of ImpactAssets to do more in-depth research about what factors contribute to the funding gap that women face and what kinds of interventions are the most effective for helping women achieve their fundraising goals in a way that allows them to stay in alignment with their values.

Please stay tuned over the next few months to hear more about our findings.

[1] Global Entrepreneurship Monitor 2015 U.S. Report, Babson College

[2] Hewlett Packard report.

[3] “Why Women Don’t Apply for Jobs Unless They’re 100% Qualified” by Tara Mohr, Harvard Business Review, Aug. 25, 2014

[4] “Investors prefer entrepreneurial ventures pitched by attractive men” by Brooks et al., PNAS, March 25, 2014; available at http://www.pnas.org/content/111/12/4427.full.pdf

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