Created by IBM alums Brenda Bazan and Nancy Hayes, MoolaHoop’s goals include helping women access that crucial early stage funding that they do not receive in proportion to their participation in small business creation.
Brenda Bazan began her career at IBM and held posts across the United States and Europe that mainly focused on the small business sector. A winner of several marketing awards, she drove IBM’s global marketing strategy for small business that continues to generate growth. Her leadership has been profiled in Forbes, Time and Business Week.
Nancy Hayes served in a range of key roles during her time with IBM, including leading a corporate restructuring designed to ensure consistent execution around the globe. Since leaving IBM, she has served extensively in the human services field, including several years as President and CEO of Wise Services, a social services agency dedicated to seniors in Los Angeles County who are in danger of being marginalized, and a long stint as CEO of the Starbright Foundation, an entrepreneurial non-profit chaired by Steven Spielberg and General Norman Schwarzkopf that blends technology, media, entertainment and healthcare to help seriously ill children lead a better life.
Brenda Bazan and Nancy Hayes took some time to discuss MoolaHoop, crowdfunding, and the challenges many women entrepreneurs face in the business world.
How did MoolaHoop get developed?
We first worked together at the IBM Corporation a number of years ago. We subsequently left IBM to pursue new career paths, Brenda in microfinance and small business consulting and Nancy in social service nonprofits and academia. For both of us, working to further the success of women in business was a long-held interest arising from our personal experiences as well as those of the many women we have worked with over the years.
We were struck by the now well-known statistics– women-owned businesses represent almost 30% of all startups yet receive just 5% of venture capital and 12% of institutional debt. Women start their business with far less capital then men, and with more personal debt, and as result these businesses start smaller and grow more slowly. We explored a number of ways to help address this issue. One niche that was not served by a solution for women-owned business was a great source of debt and equity free capital – reward based crowdfunding. We wanted to adapt the crowdfunding model to business and specifically to women entrepreneurs.
Why did you choose the all or nothing model? Could that not prove discouraging to someone that falls just short?
Actually, a distinguishing feature of MoolaHoop is the establishment of milestones – breaking up a larger goal into smaller, achievable goals that each represent an achievement that moves the business forward.
When the first milestone is achieved, the entrepreneur receives the funds that have been pledged, and she also immediately receives the funds for all pledges made after that first goal is achieved. For an example of a project with milestones on MoolaHoop, see Safari Challenge: https://www.moola-hoop.com/project/safari-challenge-mobile-app
Can you cite some key business experiences that influenced MoolaHoop’s makeup?
Importantly, our experience with the significant attributes that characterize women’s leadership and management styles contributed to the development of MoolaHoop – women are active networkers, are collaborative and team-oriented, value advice from a trusted source, respond to feedback and seek input from others.
As the crowdfunding industry evolves, more niche sites are appearing that wish to service the needs of a specific subset of entrepreneurs. What steps has MoolaHoop taken in that regard?
Our focus is women-owned and women-led businesses with a focus on helping women start and grow their businesses. We were the first such rewards-based crowdfunding site to launch (July 24, 2013). We do anticipate more niche crowdfunding sites to launch, as the worldwide market for crowdfunding, as we have seen, is very large. We have built MoolaHoop with an eye toward how women like to communicate and how they think about their businesses.
Even with the number of niche sites, many people’s knowledge of the industry seems limited to Kickstarter and maybe Indiegogo. How do you combat that?
As with any new industry, consumer awareness will grow over time. We focus on the fact that we have a platform to help women run their marketing campaigns to secure funding from their professional and personal networks, including existing and prospective customers, and from the extended networks of those contacts. We partner with organizations (nonprofits, for profits) and individuals (i.e. coaches and consultants) that already work with women entrepreneurs. The women entrepreneurs view these organizations and individuals as “trusted advisors”. We call them MoolaHoop Scouts. MoolaHoop is another tool that these Scout organizations and individuals can offer to their entrepreneur clients. MoolaHoop partnerships are intended to benefit all parties by identifying women-owned business for which crowdfunding might be a good option.
Many initiatives whose aims are to help female entrepreneurs have an element of mentoring and/or peer support built in. What steps have you taken and are there any more coming?
We agree – in addition to funding, women entrepreneurs are often in need of mentoring and, importantly, connections with a community of like-minded women. In addition, they seek resources (legal, financial, social media, etc.) and are appreciative of referrals from sources they trust and respect. During its launch and early growth phases, MoolaHoop is providing one-on-one support and referrals to the women entrepreneurs. That is another important reason for partnering with Scout organizations that serve women entrepreneurs – we are teaming with those that already provide community, connections and content of value to women business owners.
Are most of the businesses on MoolaHoop run by new entrepreneurs or is there a range of experience?
We see a range….an existing business seeking to launch a new product line but unable to secure a loan; a company with a pro-social cause seeking to move into a new area; a brand new idea for an app.
Starting a site like this comes with countless challenges. Are there specific people who have reminded you why you are doing this in the first place?
It is extremely rewarding to see a woman entrepreneur who receives the funding that enables her to produce her product or service, attract more customers and demonstrate that they can deliver on a promise. Many of the women we work with have a pro-social cause to their business or donate a share of sales/profits to a cause. Live Worldly is an example – they were seeking funding so they could launch a new product line featuring products made by artisans in Kenya. A portion of their profits will go to education projects in Kenya.
Now that there has been some progress with the JOBS Act, where are you at with your plans to provide access to debt/equity offerings via partner organizations? Have these organizations been identified? When do you expect to announce your plans?
Our plan is to partner with companies that offer equity crowdfunding to women entrepreneurs. We have been talking with several such companies but are not in a position at this time to say more.
Must projects have a defined beginning and end, or may an entrepreneur come back for funding at a subsequent stage of the same project?
As long as the entrepreneur can articulate a business goal she will achieve with the funds she is raising, and has a history of delivering on those promises, she can return to MoolaHoop with subsequent projects. An example might be a new bakery: one goal might be to raise enough for a commercial oven; later she might need to purchase a frozen yogurt machine.
Why do women receive a disproportionately small percentage of VC and institutional lending? It seems smart investors would see opportunity in this disparity.
There is no one reason. For example, one reason that has been offered by some researchers are that women-owned businesses have not been highly represented in the technical field for example and that many venture funds are focused on that field.