Life has kept Payal Kadakia on her toes for as long as she can remember.
When she was 3 years old, Kadakia started dancing. By 5, she was performing classical and folk Indian dance. Her passion for dancing stayed with her through high school and college as she earned high school academic awards in math and physics and majored in operations research at MIT.
After college, while working in digital strategy and then in consulting, she continued to fuel her creative spirit by dancing with local dance companies. Finally, in 2008, she started the Sa Dance Company to fulfill her desire to bring Indian dance into the mainstream. With a mixture of friends, professional dancers, and corporate women, her company took off, selling out shows, landing gigs at festivals, and eventually prompting an article in the New York Times.
Accompanying the NYT article was a large photo of the dance group, resplendent in red and black, performing for a large crowd in Manhattan. The moment was one Kadakia, now 30, would not soon forget. "I always remember that day," she told HuffPost. "It was the day I took my GMAT books and I threw them away. It was one of those signs from the world where you realize you're meant to do something even bigger and greater."
Now, Kadakia is choreographing another success with her new startup, Classtivity.com. Classtivity helps people find classes in everything from yoga, dance and martial arts to cooking and music. The website pulls in information from 15,000 studios and 115,000 classes per week, so visitors can find what they're looking for and at a time that suits them. Eight cities are currently listed on Classtivity, covering both coasts as well as Chicago. The company already employs 10 people, with plans to expand in the near future.
Though Kadakia and her co-founders initially started the company to fulfill a market void -- she remembers how frustrating it was trying to find a good class in New York during her dance company's off season -- she sees Classtivity growing into something much more. "I realized there was this potential of improving peoples' lives if we built something like this," she said. "The number one thing we're trying to do is create experiences."
Kadakia says the path to success hasn't been easy: "In a startup, there have to be challenges. Otherwise, someone else would have done it already. And that's almost the most exciting part."
One challenge the company ran into was actually getting people to book classes through the site. When it first launched, there was plenty of traffic but Kadakia was unsatisfied with the volume of transactions. Last fall, the team came up with a new idea to build on top of the existing scheduling framework: a Classtivity Passport. The Passport -- currently only available in New York -- is a pre-purchased pass that allows holders to try 10 classes at a selection of venues around the city. Since the Passport's launch, the company has seen over 10,000 reservations on the site.
Her advice to aspiring entrepreneurs? Learn to toe the line between dedication to an idea and flexibility. "It's ultimately a matter of knowing what you're trying to do, but at the same time being agile enough to move around," she explained. "Every time I think there's a constraint, I question whether it's really a constraint. If we say, 'We can't do this' or 'The product can't do this' I ask, 'Why not?' and then we break it down."
Kadakia also regularly attends classes -- sometimes seven days a week -- and puts herself in the shoes of potential customers, trying to understand their fears, hesitations and concerns when considering a new class.
When asked if she faced any unique challenges as a woman entrepreneur, Kadakia evoked the importance of balance. "We stipulate about where we need to be in life: By this age you should be married, by this age you should have kids. But it's not that you can only do this or only do that. It's really about creating a holistic life, about planning ahead and being efficient with your time, and really listening to yourself."
In the end, Kadakia simply hopes she can help others find the same euphoria she feels when she glides across the dance floor.
"The backbone of Classtivity is helping people discover those passions and stay connected to the things in their lives that they love," she said. "You should wake up in the morning and say, 'What do I want to do today? What's going to make me happy?' Any time you find yourself doing something out of obligation, that's a time you should start questioning whether you're spending your time wisely."
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Are there people in your community who you think would be willing to invest in your business idea? Need a way to reach them and handle the logistics? Try crowdfunding. Here's how it works: entrepreneurs use a <a href=http://blog.webdistortion.com/2010/07/18/9-crowdfunding-websites-to-help-you-change-the-world/>crowdfunding site</a> to build personalized web pages through which they can raise money from their friends, family or anyone interested. Often, investments can be as little as $1. When the business turns a profit, investors -- hopefully you'll attract a lot of them -- receive a cut of the profits in proportion to their investment. And each person's risk is low because he or she is part of a "crowd" of investors. The most prominent crowdfunding site is <a href=http://www.kickstarter.com/>Kickstarter</a>, which bills itself as the "largest funding platform for creative projects in the world." In order to receive funding on Kickstarter, users must set a funding goal for their projects and then reach or exceed it, or no money changes hands. The site charges 5 percent of the funding goal if it is reached, and nothing if it is not. Kickstarter <a href="http://www.economist.com/blogs/prospero/2010/10/crowd-funding_art" target="_hplink">made headlines</a> when one of the projects posted to its site raised $10,000 in just 39 days. Other sites like <a href=http://www.profounder.com/>Profounder</a>, which is currently in private Beta, aims to make crowdfunding easy for ordinary business owners. They'll assist in creating legal documents that will make the investments official and the terms easy to understand by all. Profounder will also enable users to hold both private and public rounds of investments, collect those investments, keep track of filings, deadlines and bookkeeping, and distribute repayments to investors automatically. Similar crowfunding sites include <a href=http://invested.in/>Investedin</a>, <a href=http://www.chipin.com/>Chipin</a> and <a href=http://www.indiegogo.com/>IndieGoGo</a>. For fashion entrepreneurs, try <a href="http://www.catwalkgenius.com/" target="_hplink">CatWalkGenius</a>. And for musicians, try <a href=http://www.audimated.com/>Audimated</a> and <a href=https://www.sellaband.com/>SellaBand</a>.
"There may be no opportunity like the present for domestic microfinance to energize small business," <a href=http://www.huffingtonpost.com/gina-harman/were-lending-to-small-bus_b_777909.html>said Gina Harman</a>, President and CEO of ACCION, the largest non-profit domestic microlender in the U.S. Microfinance consists of lending small loans to businesses that don't qualify for traditional loans or other investments. The loan amounts typically fall under $35,000, and are as little as hundreds of dollars in some developing nations, where the model first became popular. Although microfinance in the U.S. has been around since the 1980s, there are only a handful of organizations today that make more than 100 loans a year, including <a href=http://www.accionusa.org/>ACCION USA</a>, <a href="http://www.opportunityfund.org/" target="_hplink">Opportunity Fund</a> and <a href="http://www.Kiva.org" target="_hplink">Kiva.org</a>. According to the Aspen Institute, domestic microfinance groups loaned <a href=http://www.businessweek.com/smallbiz/content/jun2010/sb20100623_254150.htm>$57 million in 2008</a> (the most recent data available), up 68 percent from a previous survey in 2002. Small business microloans average nearly $9,000, Aspen's most recent survey found, and are usually capped at about $35,000. Just over a year ago, Kiva.org launched a <a href=http://www.kiva.org/us-microfinance>microfinance program in the U.S</a>, which recently received a <a href=http://www.kiva.org/blog/2010/10/20/kivaorg-and-visa-partner-to-expand.html>boost from Visa</a>. Kiva's U.S. microloans average $7,000. For more information on domestic microfinance, keep an eye on <a href=http://www.huffingtonpost.com/gina-harman>Gina Harman</a>, who will be regularly contributing posts on the topic to HuffPost's <a href=http://www.huffingtonpost.com/news/small-business-america>Small Business America</a>.
Peer-to-Peer Lending or "P2P" is for-profit lending between a lender and an entrepreneur without the intermediation of a traditional financial institution. Pioneered by the startup Zopa in the U.K. in 2005, and by <a href="http://www.prosper.com/" target="_hplink">Prosper</a> in the U.S. in 2007, most peer-to-peer lending takes place on the internet. But P2P has taken <a href=http://www.nytimes.com/2008/10/16/technology/start-ups/16peer.html>a lot of heat</a> in recent years. <em>Slate</em>'s <a href=http://www.thebigmoney.com/articles/money-trail/2010/01/18/you-are-unlikely-prosper?page=full>Mark Gimein pointed out</a> in early 2010 that Prosper was essentially a "microcosm" for the credit crisis: unqualified borrowers, high interest rates and even higher default rates. Many lenders using Prosper lost money during the Great Recession. But <em>Reuters</em> financial blogger Felix Salmon <a herf=http://blogs.reuters.com/felix-salmon/2010/01/19/the-problem-with-peer-to-peer-lending/>still has hope</a> for P2P lending site <a href=https://www.lendingclub.com/>Lending Club</a>, which claims to have issued more than $170 million in personal loans and paid out more than <a href=http://blog.lendingclub.com/2010/10/04/12x12-lending-club-issues-12m-in-personal-loans-surpasses-12m-in-interest-paid-to-investors/>$12 million</a> in interest to investors since 2007. Still, be forewarned, this kind of financing can risky for both borrowers and lenders.
Angel investors are high-net worth individuals who make equity investments in young companies using their own money. To find an angel investor in your locale, <em>New York Times</em>' small business blogger Adrianna Gardella <a href=http://boss.blogs.nytimes.com/2010/06/22/find-an-angel-investor-before-you-need-one/>suggests</a> going to the many networking events they hold. To search for angels nationwide, the two best online listings of active angels are the <a href=http://bizfinance.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=bizfinance&cdn=money&tm=618&f=00&su=p649.3.336.ip_&tt=2&bt=0&bts=0&zu=http%3A//www.angelcapitalassociation.org/>Angel Capital Association</a> and the <a href="http://www.angelcapitaleducation.org/" target="_hplink">Angel Capital Education Foundation</a>, supported by the Kauffman Foundation. Two very good search tools can be found on <a href="http://angel.co/" target="_hplink">AngelList</a> and <a href=http://angelsoft.net/>Angelsoft</a>. And business incubator programs can also be a great place to find angels (here's a <a href=http://blog.shedd.us/321987608/>solid list</a>). Finally, make sure to abide by the "<a href=http://online.wsj.com/article/SB118530808497176497.html>do's and don'ts for wooing angel investors</a>" and <a href="http://mashable.com/2010/11/03/investor-funding-tips/" target="_hplink">take this advice</a> from some seasoned veterans.
Venture Capital Funds
Even before you begin your search for venture capital, you'll need to learn how the venture capital game works. Don't you want to know what that VC is <a href=http://blogs.wsj.com/venturecapital/2010/08/27/what-is-that-vc-really-thinking-during-your-pitch/>really thinking during your pitch</a>? First, run to your local library to pick up a copy of <em>Venture Capital and The Finance of Innovation</em> by Andrew Metrick or buy a <a href=http://www.amazon.com/Venture-Capital-Finance-Innovation-Metrick/dp/0470074280>used copy online</a>. Second, keep an eye out for Huff Post's new <a href=http://www.huffingtonpost.com/news/small-business-america>small business section's</a> VC series, in which we'll explore exactly what venture capitalists look for in the companies they invest in. Once you've equipped yourself with the proper VC know-how, sign on to <a href="http://angelsoft.net/" target="_hplink">Angelsoft</a> and <a href="http://angel.co/" target="_hplink">AngelList</a> -- and find your VC. (Pictured Above: A partner at the venture capital firm Kleiner Perkins announces a $100 million fund to spur the development of applications for the iPhone.)
Small Business Administration Loans
Unlike most of the Small Business Administration's (SBA) loan programs, the SBA's <a href=http://www.sba.gov/financialassistance/borrowers/guaranteed/mlp/index.html>7(m) Microloan Program</a> does not require borrowers to go through a bank. The loans come directly from the SBA, and are administered to business owners via "nonprofit community-based intermediaries." (To find the name of an intermediary micro-lender in your area, visit <a href=http://www.sba.gov/financialassistance/>this section</a> of the SBA's website.) The qualification criteria for these funds are also considerably less stringent than traditional SBA-backed bank loans. Over the last 18 months, Congress has tripled the amount available for SBA microloans in the U.S. to $75 million nationwide. And in October, the SBA <a href=http://articles.latimes.com/2010/oct/15/business/la-fi-1016-sba-microloans-20101016>increased the ceiling for each microloan</a> to $50,000, up from $35,000. Currently, the average microloan amount is about $13,000, according to the SBA. (Pictured Above: President Barack Obama and Small Business Administration Administrator Karen Mills deliver a speech)
Community Development Financial Institutions (CDFIs)
<a href=http://cdfi.org/index.php?page=info-1a>CDFIs</a> are financial institutions that provide credit and financial services to underserved communities. They might be community banks, but they can also be credit unions, development loan funds, venture capital funds or community development corporations. Originally formed in the early 1980s, CDFIs are mainly funded by Treasury and currently manage over $30 billion in assets. Find one of the 1,000 CDFIs in the U.S. at the bottom left of <a href=http://www.opportunityfinance.net/>this page</a> and check out <em>Entrepreneur</em>'s <a href=http://www.entrepreneur.com/money/howtoguide/article52722.html>article</a> on CDFIs for additional information. (Pictured Above: A CDFI plans to redevelop a community in Louisiana.)
Tap An IRA or 401(k)
You'll likely need the help of a financial planner or third-party <a href=http://www.benetrends.com/home/index.php>retirement-plan administrator</a> for this <a href=http://guides.wsj.com/small-business/funding/how-to-tap-an-ira-or-401k-to-help-fund-a-start-up/>tricky strategy</a>. These professionals can help you set up a C corporation and establish a corporate retirement account. You can then roll outside retirement accounts into the corporate plan and invest the money into your own company's stock, a move that's also called a "self-directed IRA." Warning: there are serious dangers. This method of financing not only risks your retirement (given that most startups fail), but will likely cost you big money, as advisers charge several big upfront fees to help set up this kind of plan and levy large annual costs. Plus, the IRS <a href=http://articles.moneycentral.msn.com/Taxes/TaxShelters/use-your-401k-to-start-a-business.aspx>will be watching</a>.