Women in leadership roles are steadily increasing, and more companies are stepping up to the plate and recognizing the drastic disparity that still exists.
One company taking on this challenge is FundAthena, the first marketplace platform to emerge under the SEC's Reg A+ ruling. They will focus on finding Main Street investors for gender diverse companies to address the funding gap, in a move similar to crowdfunding.
I spoke to FundAthena's co-founders, Rod Turner and Kim Folsom about their plans.
How is FundAthena setting the agenda for gender diverse funding?
FundAthena is setting the agenda for gender diverse funding by deliberately changing the rules that have limited women led businesses. Our goal is to raise capital for women led businesses, those with gender diverse management teams and companies that commit to make themselves gender diverse.
Instead of ignoring the inability of great women led businesses to access growth capital, we are inverting the situation, and exclusively funding those same companies. It's about time someone did!
To deliver on this promise, we utilize, and are the first entrant into, the new Regulation A+ marketplace. Reg A+ suits successful early and mid stage companies that need to raise from $2 Mill to $50 mill of growth capital per year, and some very special startups. We have coined the phrase "Simple Public Offering" or SPO, for Reg A+. It explains the approach in a nutshell, and is less intimidating.
How is FundAthena boosting the female start up market besides its funding model?
FundAthena provides extensive community feedback, advice, and involvement to help company management figure out the best offering method and terms for their business, and to get exposure to women role models who have built successful companies.
We do this in our TestTheWaters(TM) program, in which companies can improve their offering, and when ready, test the financial appeal of their offering with our investors, prior to registering with the SEC. By this method our companies can find out how well they will do at extremely low cost.
Startup company founders and executives that are not ready to raise capital can learn the ins and outs by example. And we will put them in touch with relevant advisors, mentors, and resources, rated by our members, so they can accelerate to the state of readiness for raising capital.
What will the SEC Reg A+ ruling do to change the industry?
There has been a huge gap in the capital markets until the advent of Reg A+/ SPO.
Startups: Today, the combination of primarily Angel investors ($60Bill/yr) and VC firms ($36Bill/yr) serve the capital needs of startups. (setting aside for the moment their lack of funding for women led startups).
Very late stage, large companies: Are well served by conventional Public Offerings ($244 billion in the last year, including secondaries), which serve a very select slice of US companies. In 2014, 23 companies per month were able to make an IPO in the conventional IPO market. Public market valuations for offerings averaged $4.4 Bill and IPO offerings averaged $309 million per company (over the last year). These figures demonstrate that the IPO market serves a small number of very highly valued businesses that make up a tiny numeric portion of the US corporate landscape.
Mid stage and late stage companies: Reg A+/ Simple Public Offering (SPO) fits a huge need. It fits neatly between the Angel and VC category at the low end, and the conventional IPO market at the high end. The range of capital raise is $2 million to a maximum of $50 million per year per company.
Reg A+/ SPO fits the mid and late stage range of US and Canadian businesses. We estimate that this market will be $55 billion invested capital by 2020.
Reg A+/SPO also allows investors to sell their shares immediately after purchase. As stock markets emerge to trade these shares, the after market for them will become established, making it easier for companies to make secondary offerings on FundAthena (allowed once each 12 months).
What is the impact of Main Street investors on gender diverse growth stage companies?
Main Street investors have few if any biases against backing women led businesses. Add in the fact that the FundAthena marketplace provides transparent access to our companies, their performance and their market prospects - then you can see that we have the metrics to show our companies in detail. Main Street investors will be inclined to back the best companies because efficient access to actual performance displaces bias.
The inclusion of investors from the "Main Street", who represent some 51 million households with savings and retirement assets of over $5 trillion dollars (in the US alone), is very significant. Worldwide investors are allowed to buy shares in Reg A+/SPO, further increasing the investment pool available.
What impact do you hope FundAthena will have in the next year?
We plan to have funded and added real value to numerous great companies led by women or gender diverse teams in as little as 12 months from now.
We will raise capital for companies that commit to make themselves gender diverse and do so measured in the public eye. From this, one can see that we intend to change the status quo.
We hope that by our focus on correcting the extremely difficult bias that great women entrepreneurs and executives face, we will cause a tidal wave of public focus and change for the good. That might sound ambitious, but the situation where so many talented women in the US are simply not able to leverage their acumen for their good and for the good of the US economy simply has to change, and now is the time.
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