AURA. How to Finance a Black Women-owned Business in Modern PowerPoint Presentation PA G E

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1 AURA Modern PowerPoint Presentation How to Finance a Black Women-owned Business in

2 Welcome! AGENDA Business Planning Your business credit history: Dun and Bradstreet. Data and Resources for Black women businesses The best non profit, local/state/federal resources Steps in the business financing process Protecting your ideas: intellectual property rights What type of financing products and sources/investors/lenders are best for your business: banks, credit unions, factors, hard money lenders, crowdfunding, credit cards, venture capital, digital currency, ICOs. Why you should seek out venture capital these days. Which ones to go to. How you should approach them. 2

3 Business Credit Scores Dun & Bradstreet PAYDEX How promptly you ve paid bills in the past. Intelliscore PlusSM from Experian Delinquency risk FICO LiquidCredit Small Business Scoring Service NAV Source for both personal and business credit scores Remember, these guys got it wrong in the years leading up to the financial crisis. Still likely to be wrong. Will certainly be biased against Black women. 3

4 Business Loan Resources FUNDBOX ONDECK KABBAGE No credit check business loans. Funding up to $100K. 500 credit score and $100k+ revenues for up to $500K 550 credit score, monthly payments, loans up to $250K. FOUNDERSUITE LOANBUILDER PAYPAL Investor CRM Search and manage 550 credit score, $42k in revenue. Up to $500k loan. $42k in revenue. Up to $500k loan. SOURCE: 4

5 Federal Government Funding We are not a big fan. These resources simply do not work to provide capital to Black women businesses. (They may provide one or two loans, sure, but ) SBA The SBA offers three types of startup loans: SBA Microloan, SBA Community Advantage Loan, and SBA 7(a) loan. The SBA Microloan caps out at a $50,000 limit. With a higher-than-normal interest rate (8-13%). The Community Advantage Loan program provides loans to businesses in an underserved community. It has a higher loan limit of $50,000-$250,000, and a lower interest rate of 7-9%. The 7(a) Loan requires a credit score of at least 680, no bankruptcies, and collateral for any loan amount over $25,000. MBDA MBDA, a bureau of the U.S. Department of Commerce, leads Federal Government efforts to promote the growth and global competitiveness of minority business enterprises (MBEs). MBDA has established key priorities designed to overcome the unique challenges faced by minority business enterprises (MBEs). MBDA is now initiating new approaches to serve MBEs that compliment Presidential priorities and U.S. Department of Commerce goals. Helps Hispanic businesses these days, not Black one. THEY DO NOT MAKE LOANS OR INVESTMENTS. 5

6 State/Local Government Funding We are a bigger fan, but still cautious. TEDCO (State of Maryland) The Pre-Seed Builder Fund is offering $50,000 in funding for early-stage entrepreneurs in Maryland, as well as eight months of formal programming. The idea is to provide both financial and operational support for companies who are socially or economically disadvantaged, and it turn create more startups in the state that receive follow-on funding and ultimately achieve success. DC s BEACON Grant Program The BEACON Grant Program will award $50,000 to Ecosystem Builder Organizations that design innovative and inclusive approaches to supporting women entrepreneurs in Washington, DC. Through the grant program, BEACON aims to support programs that reach underserved populations of women entrepreneurs, expand women's access to capital and resources, and create a coalition of women entrepreneurs who support each other's success. DC still owes us money from an eelier initiative, but we have to mention them a an option. 6

7 Data on 105 Black & Latino Founders Who Raised $1mm+ In VC Funding ($2.7bn Total) Key Findings The 105 companies raised $2.7 billion of capital. The firms with the three highest raises overall raised $1.5 billion while the median raise is $3 million Women represented 54% of founders, but only 40% of the capital raised, receiving 3.6 times less per median deal. 50% of the companies latest funding was a seed round, but 13% have been acquired or gone public. Software, e-commerce, media & entertainment and healthcare represented 52% of companies, but only 32% of capital raised. The median raise does not vary significantly by city, but New York, San Francisco and Los Angeles represent 82% of money raised or $2.2 billion. Of the 105 companies 54 (46%) had male founders while 63 (54%) had female founders. 68% (79) of founders were African American while 32% (38) are Latino. There were 117 founders with 105 companies. Most were started in

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9 Financing Strategies Strategy 01 Friends and Family. For Black women, the most likely source of capital. Personal credit cards, home equity, 401K. (62% of all startups. 100% of Black startups.) MONEY TOOLS Strategy 02 External traditional: banks, credit unions, CDFIs, business credit cards, equipment financing, SBA, micro lenders (Kiva, etc.), invoice financing. Due to racism, low chance. Strategy 03 External non-traditional. Crowdfunding, ICOs, the Mob (just kidding they are included above ) Higher chance of success, but limited. 9

10 Business Strategy WHY PLAN? Business Plan Business plans are used to obtain funding or by small business owners looking to make their business strategy explicit. A plan give lenders and investors more confidence. It shows that you re serious, helps others understand your business, and describes revenue and income (profit) flows. Use templates on MinorityFinance.com. 10

11 Intellectual Property COPYRIGHT TRADEMARK PATENT Legal ownership of music, literary and photographic works. Does not protect the idea. Legal ownership for terms of business identifying brand names, titles, etc. Legal ownership of the process to create and market certain products/processes. Strongest IP protection. 11

12 Udemy Web Courses Investing 101. Crowdfunding mutualfund-investing/ crowdfund/ 12

13 New Funds (We ve seen this picture before, tho) Backstage Capital New Voices Fund We met with these guys at 1776 in May, Frankly, we think they may be helpful eventually, but they are small, with a selection process that mirrors that of white male VC firms (the problem is the greed imbedded in the processes.) Apply anyway. We are more optimistic about this fund, but the same caveats apply. The Fund website had a soft launch in February 2018 and, so far, $30 million has been invested or committed to eight companies: 13

14 New Funds (We ve seen this picture before, tho) Dreamers Fund Arrive Will Smith is teaming up with Japan's World Cup soccer star Keisuke Honda to launch an investment fund this month, with the aim of raising $100 million of Japanese money and investing in U.S. startups. The investment platform will work with early-stage startups, and offer investment of capital as well as assistance with business development, branding and more to help those select companies flourish, per the official announcement. 14

15 Digital Applications ICOs and STOs An initial coin offering (ICO) or initial currency offering, a type of crowdfunding using cryptocurrencies. STO stands for security token offering. CoinBase Platform for buying and selling cryptocurrency. Can you use this tool to raise money? Yes, but see: 15

16 CONTACT US Thank you for attending our webinar. Should you have questions, please reach out. OUR HEADQUARTERS WASHINGTON, DC UNITED STATES PHONE: