Women build businesses at a faster rate than men, and businesses run by Black women are the No. 1 new business category. Yet less than 8 percent of all venture-capital dollars go to companies with women-led founders, and the numbers are worse for Black women — less than 1 percent.
Dr. Roshawnna Novellus saw the disconnect between the industry trends and what’s happening in the financing sector. She set out to do something to change the statistics.
Novellus is the Atlanta-based founder and CEO of EnrichHER, a debt-based online loan financing platform that helps women get access to crowdfunded or direct loans.
From 2007 to 2018, the number of women-owned businesses increased 58 percent compared to 12 percent overall, according to the American Express State of Women-owned Business Report 2018. Revenue at women-owned businesses jumped 46 percent in the same period.
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Clearly, women are bringing the receipts when it comes to proving their ability to start and run businesses. Yet men are more likely to get loans or equity financing versus women, according to a SCORE report. Women are more likely to use credit cards to help fund their business while men use equity investors.
Novellus has hosted events across the country to help expose women founders to alternative funding methods. Women founders are a growing population but are underserved in the financial industry. Focusing on this growing population, Novellus and her team have seen significant growth and are anxious to provide access to around $500 million in loans.
EnrichHER offers two types of loans — crowdfunded loans and institutional loans. In the first three months of 2019, the platform grew from five companies per week to lending money to 250 women-led businesses per week.
In the next five years, Novellus sees EnrichHER funding 10,000 women. She sees the company revolutionizing the financial landscape with its own artifical intelligence-based credit model. It’s a model that she hopes financial institutions can use to open up their own sources of capital for women-led businesses.
Novellus spoke to Moguldom about how she secured half a billion dollars from institutional lenders, the value of participating in a good accelerator program and how women can access funds through the EnrichHER platform.
My vision is to lend millions of dollars every week to women and start seeing the difference in the economy. But I need the women to come and apply.Dr. Roshawnna Novellus, founder and CEO of Atlanta-based lending platform EnrichHER
Moguldom: Why did you start EnrichHER?
Roshawnna Novellus: Over the years, I’ve cared about the lack of access to capital for women founders. In fact, less than 8 percent of all the VC dollars go to companies with women-led founders. The number drops to below 1 percent when you look at women of color. And when you look at combining sources like the SBA (Small Business Administration government agency) and alternative lenders, the number is still only at 18 percent. Women build businesses at a quicker rate than men and in fact, businesses run by Black women are the No. 1 new business category. Clearly, there is a disconnect between the industry trends and what’s happening in the financing sector. I firmly believe there has been no true innovation and push to disrupt the current financial landscape, so I said, “Hey, I have experience as an entrepreneur. I have a tech background and a marketing background. Let me try to see if I could do something to change the statistics.”
Moguldom: You started the company in 2017. Share some of the challenges you have encountered since then.
Roshawnna Novellus: Originally, I started out to be a source of inspiration for women. We had our first event in Atlanta in April 2017 and had the support of 30 organizations that support women-led companies. The event sold out. It was great, but I started looking at the ecosystem and realized there are a lot of people that do events that provide inspiration, networking, and education, but they actually don’t provide the solution, which is capital. I thought this is great, but I can do more. At that point, I started speaking with investors trying to share the idea of a technical lending platform to provide capital for women-led businesses.
Right off the bat, people asked me “Is it a charity?” “Can women even build businesses?” “Do women know how to repay loans?” There is a lot of challenges and education on what is a loan along with the lack of respect when it comes to women who run businesses. There are tons of successful women out there. Time and time again, people keep telling me there isn’t enough data that shows that women know how to build businesses, and it infuriates me. I ask them, “Where are you living?”
This is a big part of the problem because these are the people who make the decisions on which companies get funded and get a chance to move forward. If I’m a woman building a high-tech company, I need people who have money to fund my business so I can ramp up. Luckily, I did find some people to help me while I bootstrapped and was creative in how I could move forward.
Another challenge was that I had to get approval from the SEC (Securities and Exchange Commission) and FINRA (Financial Industry Regulatory Authority). It is a really, really difficult process. They’ve only ever approved 27 companies in the country to allow businesses to raise securities online. The whole process took about eight months to complete. And at various times, I’m like, “Is it worth it?” The government clearly doesn’t really care about being consumer-focused and there are a lot of steps you have to go through. It was extremely frustrating to get through the process. It took me until June 30, 2018, to get through the legal part of being able to execute this idea.
After that, I needed to raise money so I could lend out. I had to pitch to a variety of institutional lenders and convince them on the idea. I had to convince them of how underserved women-led businesses are a good investment and how it’s a good faith market. There are studies that show women pay back loans at a higher rate, are more risk-averse and are better at managing money. It’s actually a better deal for investors to invest in women. It took me about six months to get a lending contract. So, in January 2019 we were able to finally lock this entire platform. During the last three months, I’ve been in Techstars, we have grown from adding five companies per week to 250 companies per week. And so, we are super excited. It takes time, great supporters and a team to make all this stuff happen.
This problem is obvious, right? It’s obvious women aren’t getting the funding we need. It’s obvious there is not a solution in the marketplace. And it’s obvious that having a way to get money to qualified entrepreneurs would be helpful. That’s what we’re trying to do.Dr. Roshawnna Novellus, founder and CEO of Atlanta-based lending platform EnrichHER
Moguldom: You have experienced great growth and partnered with organizations such as WITI, The Jump Fund and Founders of Color. How did you build good partnerships?
Roshawnna Novellus: I didn’t know I was doing it when it happened. The fact that I had events first and grew the community first really helped with market adoption. I already had relationships with organizations like Founders of Color and others because I had always included them. All of our outreach efforts supported them and their events. So, when it was time for us to launch, I was able to leverage existing relationships. In addition, what we’re doing is actually mission aligned with lots of organizations. We reached out to 100 organizations in a two-week period. Sixty-five said, “Yes, we want to partner with you.” We’re still working on onboarding all of them. The response rate was phenomenal and was way higher than we expected. But this problem is obvious, right? It’s obvious women aren’t getting the funding we need. It’s obvious there is not a solution in the marketplace. And it’s obvious that having a way to get money to qualified entrepreneurs would be helpful. And that’s what we’re trying to do.
I think for people who get it, it’s like, “Why wouldn’t I work with you? What do I need to do?” The fact is what we’re providing is actually needed in the market. And of course, it also helped being at Techstars. They are very aggressive with expectations. And they always say, reach higher, do better, do more or do it faster, right? It really helps because a lot of times we have this narrow perspective of how we can grow and who we need to partner with and what kind of traction we need to do certain things. And the reality is when you are confident of who you are, and you know your message, it is much easier to get people on board.
Moguldom: You’ve gone through accelerator programs and you believe it worked for you. Are enough of us pursuing these programs? Or do you think we are pursuing them, but just not being successful with getting in?
Roshawnna Novellus: I think it’s different. I think there are a lot of programs out there, but not all of them are actually helping founders and a lot of us get into those programs. What’s great about Techstars is that the people actually open up their network and do personal introductions to people that can actually help you scale your business. And there’s a lot of people in the network who are willing to do this and willing to help you. There are a lot of programs that exist where the founders don’t get any help from mentors. They don’t get any introductions to investors or domain experts. These are more education-only type of programs that don’t have any way to leverage relationships for growth or impact. I think there’s a lot of those programs that exist.
Secondly, a lot of programs are just not accessible to most people. I’m in the Techstars Anywhere program. The Techstars Anywhere Accelerator is mostly a virtual program. We only get together three times during the 13 weeks. Almost every single person in the program has a family so it’s really encouraging people can have this experience and not have to displace their whole life. I really love it, because I feel like it is way more founder friendly. I prefer to be at home in Atlanta versus me having to leave my personal network to join a program in another city which I have done twice. I had to go to DC for The Halcyon Incubator for five months, and to Richmond, Virginia for Lighthouse Labs for three months. I didn’t know anyone in Richmond, so it’s really hard to be a startup founder in a city where you don’t know anyone, and you leave everything to access a network. That’s a really hard decision to make. And so, I hope more programs like this one can emerge.
Women pay back loans at a higher rate, are more risk-averse and are better at managing money. It’s actually a better deal for investors to invest in women.Dr. Roshawnna Novellus, founder and CEO of Atlanta-based lending platform EnrichHER
Moguldom: Is the money you are distributing through your platform crowdfunded, or is the money institutional loans?
Roshawnna Novellus: We offer debt-based financing. Everything we offer is loans. We offer two types of loans. We have crowdfunded loans. It’s the newer kind of crowdfunding that almost no one else provides. An investor could lend to a woman-led business on our platform and get repaid on a monthly basis from their investment in that company. This is great for people who want that cash flow every month and are newer to investing because they don’t have to wait for five to seven years for an exit. In addition, entrepreneurs can say, “Hey, I don’t really want to do crowdfunding, I just want money within 48 hours.” And we have two institutional partnerships now valued at over half a billion dollars that are ready and willing to lend to women-led businesses and our network.
Moguldom: Did you say you were able to obtain access to over half a billion dollars to lend to women business owners?
Roshawnna Novellus: Yes. That’s what I was working on building for six months because I wanted to run with it. I wanted to say, “Hey, I can bring it all these women. If you loan them money, we can have a win-win.” A lot of these companies also want to lend to women, as they noticed this is big. They said if I could bring the women, they would bring the money. That is another reason I’m excited that we ramped up to 250 women-led businesses per week, and the sky’s the limit.
My vision is to lend millions of dollars every week to women and start seeing the difference in the economy. I’m really excited that I’m here. I have this vision and have this team and are running with it, but I need the women to come and apply. We can lend up to $250,000 per company. And it could be a loan or line of credit. And this is the direct loan so it doesn’t require all the crowdfunding pieces and they can submit a loan application. The company needs to have at least $60,000 in revenue, and the revenue determines the amount of loan someone can get. They need to be in business for one year and a minimum credit score is 600. If 4,000 women-led businesses came today, we could potentially fund them if they meet those criteria.
Moguldom: You have access to about half a billion dollars for people to loan. How much have you raised for your company?
Roshawnna Novellus: We raised a pre-seed round of $350,000. We’re not raising right now, but we are planning on raising our seed round later this year.
Moguldom: What do the next five years look like for EnrichHER?
Roshawnna Novellus: EnrichHER is funding 10,000 women. We are revolutionizing the financial landscape because we would have developed our own AI-based credit model that financial institutions can use to open up their own sources of capital for women-led businesses. Both of those things will be in effect in a five-year period. By then, I’ll be looking back and telling these stories about our journey. I’ll be on top of the world.