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How EnrichHer is helping women led small businesses get funding

Dr. Roshawnna Novellus, EnrichHER Founder & CEO, joined The Final Round to discuss how EnrichHER is helping women and minorities fund their own small businesses and what can be done about the funding gap when it comes to venture capital investing.

Video Transcript

MYLES UDLAND: We talk a lot on this program about what's happening on Wall Street. So what is the situation like on Main Street? And how are female-led and minority-led businesses faring during the pandemic?

For more on that, we're joined now by Dr. Roshawnna Novellus. She is the founder and CEO of EnrichHER, a platform that allows people to invest in small businesses led by women and minorities. Dr. Novellus, thanks so much for joining the program. So let's just start talking a bit about EnrichHER, the way you guys have changed the business just slightly during the pandemic and what the last six months have really been like for you and the businesses you're investing in navigating this time.

ROSHAWNNA NOVELLUS: Yeah, there are so many companies led by amazing founders of color and women that need resources right now. So what we've done is brought together training, coaching, and even capital to make sure these companies sustain and grow, even in the current times.

MYLES UDLAND: And so tell us a bit about the model that you have built at EnrichHER, where you have the membership that allows people to invest in the businesses. And then are you-- I guess, are you the one who is making the ultimate investment decisions in some of these companies? And what are you looking for when it comes to the businesses that you like to deploy capital into?

ROSHAWNNA NOVELLUS: Yeah, so funders who believe that more women-led businesses and more businesses run by people of color should get access to capital and resources can join as members on our platform. If they join, they see the pre-vetted companies that have already gone through cash flow analysis, analysis of analytics, such as a market demand for their product or services, and community outreach and community buy-in to those companies. So we go through a thorough analysis of each company, take them through business finance and training to make sure their cash flow models, their financial models are all up to par and make sense and they have the ability to repay any capital that they receive. So that's what the funders would have access to if they join as members to our platform.

MELODY HAHM: And then on the applicant side, I actually was quite surprised. The average applicant, according to your website, has over $250,000 in annual revenue, has over two years of revenue history, and, of course, has a high credit score. So if you think about your own process or what sort of demographic you're trying to attract, they're clearly people who have a proven business model, right?

You're not actually trying to get folks from the seed stage, or perhaps just have some lofty idea that they haven't been able to execute. How do you feel like that is the prime kind of target for you to pursue? And do you imagine sort of broadening your scope in the future?

ROSHAWNNA NOVELLUS: So that's exactly right. We are focused on existing small businesses that are already employers of people in their communities, because we believe that if more women-led and Black-owned businesses can keep their employees engaged, society will be more diverse. There will be more balance in the community.

So while that is the average statistic that you just mentioned there, our minimum is much lower. So the minimum is $100,000 in revenue, one year in business, and credit score above 600. So we do feel like that's more inclusive to a wider range of business owners. But that average just gives people a sense of what we actually see through our platform. And so funders know that these are sustainable businesses that have flow and revenue and customers and just need these-- this capital to stay in operation and grow their enterprises.

MELODY HAHM: And then a quick follow up here-- I know Myles mentioned we talk about Wall Street all the time, but we're focusing on Main Street. But they're not mutually exclusive all the time, right? So if you think about some of the businesses you're helping fund, is their ultimate goal to go public? Is their ultimate goal to really get more VC funding?

And are you sort of losing some of those customers, right? Are you kind of propelling them and catapulting them and then they go off and want to get funding from Silicon Valley? What has been your track record here? How do you anticipate that happening?

ROSHAWNNA NOVELLUS: So we focus on companies that have cash flow. So those are typically traditional businesses, all the way from companies that create dog treats to IT consultancies. While that's true, we also do help those who are positioned for VC funding. So we've funded a beverage company that has 39 flavors of beverages, a financial SaaS platform.

And a lot of times, they need this funding either as a bridge between equity investment rounds or as a way to provide-- purchase some inventory for their company. So there is a need for different types of capital, depending on where you are in your business. And simply because your equity of that company doesn't preclude you from getting working capital for your company as well.

SEANA SMITH: Speaking of different needs and where to put capital, obviously, COVID has had a massive impact on small businesses. And we're seeing that play out. Of your clients and who you're talking to, how many of them are just at risk of closing because of COVID?

And what are the necessary steps? Or what are you finding successful that they're doing in order to survive this very challenging time? Because when you take a look at the number of cases and the possible trajectory of this virus, this isn't going away any time soon.

ROSHAWNNA NOVELLUS: Right, so we all know the statistic that they expect about 42% of Black-owned businesses to close during this time. So it's really important that every business owner become laser focused on what's their most profitable service or product, how-- and restructure their product offering so that they can sustain and maintain through this pandemic. So that's the kind of training that we're taking everyone through that's a part of EnrichHER.

Like what are people still buying right now? What is your highest demand? Can you reduce the number of SKUs if you have a large portfolio so that you can become lean and focus on growth and withstanding?