Alisha Griffey | Daintree Capital

Anya Emerson | Mightly | Inc

Jessica Gordon | U.S. Commercial Service - Dallas-Fort Worth

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Please do that. Q. A. Box. Again, the session will be recorded, and everyone who remains on the line today gives their consent to be part of The recorded events with that I'm going to start recording and do the official intro

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Welcome to our first breakout session of the day.

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The Microlender Session. My name is Molissa Bulla Mcguinness, with W Marketplace the co-host.

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Of today's event and I am your tech lead for the session.

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I'd like to introduce you to the moderator today.

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Jessica Gordon. From the Us. Commercial Service.

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Thank you so much, Melissa, and welcome everyone. I'm Jessica Gordon, Director of Commercial Service, Dallas Fort Worth office, and I'm very pleased to be moderating today's topic, on micro lending I know a very much so hot, topic.

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And interesting one and I know that it's becoming increasingly important.

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4 small businesses As it is an alternative funding for small businesses who may not be in the position to secure working capital from more traditional financial programs or meetings.

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And So I'm joined today by 2 amazing women entrepreneurs who are going to be sharing their experience and expertise with you.

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So I'm joined by Alicia Griffith, founder, and CEO of Dane, Tree capital, and Anya Emerson, co-founder and coo of Mightly incorporated So we're going to jump right into the conversation.

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happy to thanks so much, Jessica. So I provide a little bit of an overview in the plenary session.

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But for you, those of you who weren't there, my background is actually mostly as a startup operator myself.

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So I spent a decade in the startup world as a coo, a Cfo of 3 different startups.

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So I've been in your shoes trying to raise money I've done a successfully.

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I've done it unsuccessfully I've taken all sorts of funny of money from different sources, and over a decade I developed a lot of opinions about what is and isn't working in how companies get funded and then who gets funded And so I found myself increasingly frustrated

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by 2 things. One was the fact that I just didn't see female founders getting money. It just didn't.

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I'm going to start with Alicia Alicia. If you will please introduce yourself and tell us about your organization and your mission, and how do you support women in business

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It wasn't in my circle. I wasn't seeing money flow to women and to people of color and the other frustration I had was that it was the same kinds of companies that kept getting funded so if you were a tax some of the tech saas business.

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Silicon valley would run to you. That's wonderful, Great!

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Here's all of our money, you know, as long as you're you know, promising a 1 billion dollar valuation in 5 years people were happy to write checks, but for a lot of these companies that had an interesting product, an interesting service they had customers.

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They were growing. But maybe not at these. You know, sexy hyper rates, and maybe not chasing these these huge Mega markets There was something about the way they were approaching it that made them quote unquote not sexy enough for Silicon Valley and those companies would get overlooked so when I found a

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dentary capital. 2 and a half years ago I decided not only to focus on getting money specifically to women and underrepresented founders, but to invest in them in a way that was well aligned with the kinds of businesses they're running or or to be clear not just that women

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only run these businesses, but that we didn't invest with all kinds of businesses that we weren't going to narrow ourselves to one business model, which is what a lot of equity investors do.

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So we provide working capital loans. We are happy to invest in any business, no matter the industry they're in, they only have to have a $100,000 in annual revenue and strong unit economics, and as long as they've got a gross story, to tell us of hey?

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Here's how I can take this money and here's how I can.

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Yeah, that's wow. That's so incredible. And I'm going to come to you on in just a moment.

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I can drive near term revenue. Then we're happy to to talk to them about alone.

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Sure. So in terms of the the eligibility, the companies we really target our sweet spot is 100,000 in rev annual revenue up to about 2 million, though we have some companies that go, you know, 3 million and beyond.

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but but really, our sweet spot is a 100,000 to to 2 million in revenue, and in terms of of our check size, it's 10,000 to 75,000.

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So what we tend to have is a lot of companies that are, you know, most of them.

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Not all. Most of them are sub a 1 million dollars. You've got companies that might Lee.

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They're just jumping over that. And and honestly, that's where we get excited.

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I want to try and get more companies from under a 1 million in revenue to over a 1 million in revenue, because that's where a lot of other investment options and local options and capital options become available.

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But in talking about the programs that you offer, Alicia, can you tell us what the high and the low range of your programs are in the average

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Absolutely. I'll be asking some work questions specifically about your programs and how to get companies engaged.

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So now, what I turn over to Onya on you can introduce yourself and tell us about your business.

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sure, so my name is Anya Emerson. I'm here in Oakland, California, and I'm one of the 3 co-founders of my late.

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Myly is a sustainable children's company.

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And how do you get started

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You can actually see all the clothing behind us. It's beautiful.

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It's really beautiful. And we started back in 2019 and I'll tell you my story, and then I'll tell you how how the company came about.

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I'm actually a former domestic violence Attorney and I worked for 10 years on women's rights issues and on domestic violence, And I saw the economic imbalance going on in those relationships every day and It drives me crazy I mean, I saw, divorces where the man had founded the

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business and the wife, had helped him the whole time, but she got very little or nothing.

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And I just got very frustrated in the sense of women need to be involved in economic life.

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Women need to found more businesses, and the same time, my friend, a friend, good friends for many, many years was leaving her business, and she's formally worked for fair trade.

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U.S.A. Work for a bunch of large apparel companies, and she was leaving her business, knowing that she could do it better essentially.

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If you want to go out and look for quality children's clothing, that is mid market price.

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So you're not paying $60 for a t-shirt.

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If you want some, thing that's organic and fair trade certified, it doesn't exist in the current market except for lately.

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So so we came about. We We had our third partner join us.

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She was. She's our chief creative designer and product officer.

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So it's been the 3 of us. It's the 3 of us.

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Then it's still the 3 of us, although we certainly use a lot of agencies and consultants to help us run the business We are available on Amazon.

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We are available on target. We're launching a national wholesale boutique program, and we have our own.

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Website mikeley.com. Our sales are just shy of a 1 million dollars right now, so we've grown it.

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I think we were 50,000 the first year to just shy of a 1 million.

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We'd like to do better. And, as Alicia says, we are hitting that 1 million dollar threshold, one of our new channels this year.

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Oh, I love seeing the problem

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Has been the W. Marketplace, which is very exciting.

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I am a very much in favor of women entrepreneurs, helping each other.

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The W. Marketplace for those who don't know is a way that if you want to buy from women own companies, you can go to them, and you can buy from women on.

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Hmm.

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Companies. But in order to get to the spot we've had, I've I've had to research pretty much every single revenue option out there, and Dane Tree I think we're on.

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Hmm.

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One number 4 through Dane Tree Jantry's been one of our biggest supporters, so I'm happy to give more information I'm gonna turn it back over to you guys.

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Hmm.

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Wow! That's incredible. Congratulations on your success, and thanks for sharing a little bit of background of how you got started.

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I'm gonna turn back over to you, Alicia, and so I'm sure by now a lot of the women entrepreneurs on the line are inspired to see this pair right?

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You provide a resource, and Anya was able to benefit from it and grow her business So can you talk a little bit more about what your typical client will look like in terms of You know their profile and then to maybe some type.

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So So that's our check size. We have both principal and interest loans, and we also do revenue based loans. Happy to chat more about those if of interest

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Sure. So you know my my typical client is, you know, a woman who's founded a business probably 2 or 3 years ago.

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So they're relatively early on in the life cycle of the business.

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They've they've got something that's working right.

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They've got customers who are paying for either their product or their service, and they're excited by their growth, and they're all of a sudden they've maxed out their credit cards They've maxed out like their ability.

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To self fund from whatever savings they have, and they aren't quite sure what the next step is, and they've heard about lots of different options, and they go to their local bank and the bank says great once you have a 1 million dollars in the bank come back and we'll give you a loan But

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until you have a 1 million dollars in the bank. You know we we can't do a loan, and so they're really struggling to figure out how to capitalize on the opportunity that they have you know, because these are women who they it's working right.

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There's something that's working. They've got customers who are buying their product. They've got, you know.

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Customers are asking for more, and yet they don't have enough cash on hand to really invest in that growth.

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So that's the story I hear again and again. Now, while we invest in companies across every industry, I will tell you.

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We end up doing a lot of inventory financing, which is similar to what we did with with mightly because there's this cycle that a lot of companies get stuck in.

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Where they have a product, they're selling it, and they it's the revenues taking off.

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So they now need to go buy more product, and they have to forward purchase that inventory, and as that revenue is going up, the the bad news on that hockey stick is your inventory costs go up and when you layer on top of that covid where supply chain.

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Issues are becoming a nightmare. Your inventory costs really start to balloon, So that is a lot of where we have come in.

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Is is in helping in those situations. So what we look at, as we say, Hey, tell us about your product.

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Tell us. About your market. Tell us what it is you're building, and why this is compelling, you know.

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Show us what the opportunity is You're trying to chase and help us Understand?

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Why you know why right now there's there's this constraint, and and then let's really look at the economics of your business.

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So when you know, when I first met Anya, and we first started looking at the first load we did with them.

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One of the questions I asked her, and I asked, Every single company is let's talk about your unit economics.

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I want to understand, for every single one of those, you know, beautiful, colorful sweatshirts that Anya cells what are the economics of that look like?

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You know How much does it cost her in terms of material, in terms of labor, in terms of any other variable cost, so that I, as a lender, can get comfortable with the idea that if I give you money it's gonna help you grow versus it's gonna dig you into a bigger hole because there

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are times when debt is not the right solution, and you're just making a small problem a bigger problem.

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And So that's really the focus of the conversation. I have with these founders is understanding those Union economics and getting comfortable with the idea that there really is an opportunity here for a long-term sustainable Company a viable business, and that short-term infusion of cash is going to

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A little bit more about the programs in terms of what are some of the basic requirements you need to see from a company

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Yeah, So I hear you say it's important to ask the right questions.

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And those really look at those Union economics. And so I'm I'm imagining from a small business, too, I would start to think about what is the appropriate time right for this type of solution when should I be pursuing these type of opportunities so audio what happened to make you realize you were

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but I can talk pretty much. The whole gamut from Sba to crowdfunding to micro loans like day tree

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Well, like like a lot of things that happen in this world.

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The way we got hooked up with Dan Tree was completely fortuitous.

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there's a couple. So first of all, I don't know that many other micro loan programs Dane Tree is pretty unique.

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we were able to get a micro loan through Hebrew free loans.

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That was a that was actually our first loan ever.

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really help, them, jump, start growth.

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We started the company essentially with a $100,000, and about half was founder Money and a half Was that keeper, free loan money, I think Dane free was Maybe our our second loan we are a consumer product company.

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We needed, you know, for for you women out there who have service oriented companies.

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You're not gonna need so much cash to get started.

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We have to buy as Alicia says, we have to buy our inventory 3 to 6 months in advance, and right now we've got, I don't know how many products we have but we have 22 different parent skews leggings sweatshirts t-shirts.

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Etc. And different colors, and in different sizes.

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I simply mentioned that say that we needed substantially more upfront cost with upfront money to get started Then a lot of other businesses do so essentially from the get go.

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I was looking for funding the way. Matt Dame Free capital was.

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We had applied for what used to be called CEO ventures, but I believe they've changed their name recently to Coralis ventures.

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They have a nationwide competition. I actually am pretty sure it's international.

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So not just us competition every year where you apply and submit your business idea, It can be a very beginning, new business, and they offer interest, free loans of up to a $100,000.

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So I applied through there. We didn't get it, but at Alicia reached out to me and said, By any chance, do you need help with inventory financing?

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And I said, Yes, great, exactly sure. We I had at that point spoken with some traditional backs.

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the traditional banks all wanted loans to be personally guaranteed, so they're going to look at your credit It will go on your credit and also, banks were generally wanted 3 years worth of business record which we did not have at that point and they also were willing to give

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us, I think, at Max one month worse of or alone, in the amount of one month worth of revenue which I don't know at that point was I'm gonna make that $20,000 because we were selling 200,000 at that point Well, $20,000 is not gonna buy me

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inventory. You know enough to scale, I business, I mean, it's not even gonna buy me inventory enough to survive.

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So so Danefry was wonderful. And And that's the story how we met.

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ready to search for outside financing and funding

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Absolutely. So. I'm inspired. What I'm hearing is that you know, ladies, if whatever reason you have looked at traditional banking options, and it just wasn't a good fit at that time.

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Don't give up. There are other resources available, and we're gonna get now into that relationship a bit.

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Alicia, so can you tell us how important is a relationship between you?

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And the business. Please tell us a little bit more about your relationship with your fellow panelists.

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Yeah, you know it's it's funny when I found a dame tree, and I told people what I was gonna do.

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Everyone from the invasion side said, You're crazy like.

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What do you mean? You're not gonna take collateral. What do you mean?

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You're not gonna ask for a personal guarantee.

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What do you mean? You're gonna work with companies that are early stage.

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they all said it was crazy. I happen to be motivated by the fact that I just want to see more female Ceos in this world, and I am excited by the idea of helping these businesses grow, and so I ignored all that Vice.

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And I said, You know what I'm gonna try this initially and see if it works, and you know if it doesn't I'm losing my own money, and so be it.

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And luckily it has worked. And so now you know, we're kind of growing and expanding.

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But what that means to your question about relationship is the relationship matters a ton, because at the end of the day these are relationship loans as much as anything else.

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When you're betting on a company that's only say, you know, 18 months old, and your not doing a credit check, and you're not asking for a personal guarantee, you know, at the end, of the day you're placing a bet on a person because there isn't 5 years of track

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record. There isn't a 1 million dollars of cash in the bank.

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There isn't collateral that you will get in the end.

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So the relationship matters a ton. I get to know these founders through the screening process where I'm trying to understand about their business.

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I'm trying to understand about what they're building.

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I also am. I'm always curious like I give them feedback along the way.

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I see how they respond to that feedback, and we really dig into their financials.

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And I ask a lot of questions and it's and often it's less, you know.

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It's none of it is a trick question, but it's always interesting to see like, how do they respond to someone?

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Kind of poking around in their financials. Do they try?

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And, you know, make up an answer when they don't know it, or they say you know what?

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That's a good question. Let me get back to you with it.

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So there's a lot of information I glean that is more art than science through the process.

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Admittedly, and the last step we take in our due diligence process is, we ask for references, because I think it's incredibly important to understand more about who these founders are what kind of advisors do they have who are they turning to for information, and support and advice and

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so those references have turned out to be extremely valuable step in the process, and I always ask to have to talk to 2 references.

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One is always someone kind of from the 30,000 foot level.

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I want to talk to an investor an advisor, a mentor, someone who understands.

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You know how the the founder has been navigating the the founding of this company, and and their growth, and then the other is a reference from the operational side, you know, so like in might lee's case, it might be like somewhere where you'd say hey?

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Can I talk to your buyer at Target com? Or can I talk to one of your manufacturing partners, or can I talk to your warehousing landlord, You know someone who You're really working with so in in the situation with dane tree because we're approaching our loans

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so differently because we're not. You know a lot of banks have these ratios.

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They like Comp. The number into the spreadsheet, outcome the ratios, and they say, Yep, you qualify or no, you don't.

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Anya

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And here's how much you qualify for, and when you do everything based on an algorithm, the relationship may not matter as much because the numbers you know, spit out an answer when you're not relying on an algorithm and you're really relying on getting to know, these women and trying

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Hmm.

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Yeah, Thank you. Thank you for sharing some of the requirements that you have.

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I think another magic question might be, Do you require a business plan?

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to understand their business, the relationship matters a ton

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Yeah, so for Dean Tree. It's really a two-step. Well, I should say it's a three-step process.

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The first step is really understanding about the business and the strategy.

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And what are you doing And that's as simple as it's A.

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It's a zoom call, right? We're getting to know each other.

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We're trying to understand at a high level. Is there a good fit between what the founders trying to build and what Dane Tree could Fund So that's kind of the the more, you know, descriptive strategic side of the business the second step is all about the financials and So for? Us.

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There's 4 pieces of information we require. The first is your last 12 months income statement.

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The second is your balance sheet. The most recent balance sheet.

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The third is your last 3 months. Bank statements, and the fourth is the unit economic analysis that I mentioned, which is really an understanding of your profitability at a per product or per service.

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Level so it might be geography by geography If you're a surface company, or it might be, you know.

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Sku by sku. If you sell a product, but understanding that profitability, those are the 4 pieces of financial information we ask for.

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We look at them, we ask, you know, kind of dig in, Ask a bunch of questions, have a conversation with the founder to understand the financials better, and then that final step is the is the reference.

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And is there any other type of documentation addition to references that you require

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As I said, I've also had to look for other funding sources, but we can come back to that if we have time

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Oh, that's a hard one. Let me just back up a second.

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I I just want, because I saw there's some confusion over over.

00:22:06.000 --> 00:22:07.000

You know what Alicia's requesting the the basics of what Alicia and pretty much all lenders are requesting are essentially the management reports that you can pull from a software, program like quickbooks So we use quick books online and so when we get a Loan from

00:22:07.000 --> 00:22:24.000

Check. So those are the 3 steps for us, and that's the information that that we require

00:22:24.000 --> 00:22:33.000

Alicia. I need to Ron reports on quick books that are the profit and loss, the balance sheet, and whatever that third one is that I forget.

00:22:33.000 --> 00:22:46.000

Okay. Yes, bank statement. So I provider with bank statements, and those 2 reports from quick books online, you don't have to use quick books, online but I would recommend a similar program if you don't.

00:22:46.000 --> 00:22:52.000

So she has insight into our finances the Unit economics that she's talking about.

00:22:52.000 --> 00:23:02.000

Because again, if especially if you're not in the consumer product world, you might not be familiar with that It's essentially how much does it cost me to produce a product.

00:23:02.000 --> 00:23:11.000

So if I sell a T-shirt for $10, how much am I paying to to manufacture that t-shirt for us?

00:23:11.000 --> 00:23:20.000

It's about 3 $3. Okay, So if I can manufacture a t-shirt for $3, and I can sell up for $10, I have pretty good unit.

00:23:20.000 --> 00:23:30.000

Economics. I have a 70% buffer to pay our other expenses to pay our general overhead, and to we pay loan loan payments.

00:23:30.000 --> 00:23:36.000

So that's what you know. Those are the kind of information we provided to Alicia at that.

00:23:36.000 --> 00:23:46.000

I We did have a pitch deck so for for you all, starting out with new businesses, I would recommend developing a pitch deck.

00:23:46.000 --> 00:23:49.000

It doesn't have to be 50 pages long, you know.

00:23:49.000 --> 00:23:56.000

It could be 5 to 10 pages long. There are plenty of online resources and people better than me.

00:23:56.000 --> 00:24:04.000

I have to say that are out there to help women develop pitch dots but a pitch deck is essentially it's kind of business plan light.

00:24:04.000 --> 00:24:11.000

It's your business plan in for someone who can take a look at it, and in 2 min understand what you do.

00:24:11.000 --> 00:24:15.000

What you value proposition is, and what your plan to make money is.

00:24:15.000 --> 00:24:22.000

So I would definitely recommend having those having those 3 things in hand.

00:24:22.000 --> 00:24:28.000

beyond that, I would definitely say, you know, relationships with lenders are important.

00:24:28.000 --> 00:24:34.000

and I I think every borrowers relationship with every lender is going to be different.

00:24:34.000 --> 00:24:42.000

I mean, it's going to be different, based on the institution is going to be different, based on what the company needs What the lender can offer.

00:24:42.000 --> 00:24:48.000

I think Alicia's made that a couple very good good references for us.

00:24:48.000 --> 00:24:54.000

If if I need to talk to someone, I can call her up and say, Hey, do you know anyone here?

00:24:54.000 --> 00:24:57.000

you know. Send me that name and she can make introductions.

00:24:57.000 --> 00:25:02.000

So we've definitely helped back and forth on that way.

00:25:02.000 --> 00:25:03.000

I I love talking to her about her business model, because I really want Dean Tree to go from. I don't know how many millions of dollars you are, now Alisha but I want it to be 10 or 100 X because there is such a need for their services out there and and 1 one company.

00:25:03.000 --> 00:25:22.000

Yeah, and audio. Considering that Alicia shared some of those requirements, and the type of questions that are asked in your experience, What type of support did you expect from your investor your lender? And Maybe what were some of the questions that you didn't feel most prepared for

00:25:22.000 --> 00:25:28.000

Absolutely. There is an incredible need. And we're gonna thanks for sharing those nuggets.

00:25:28.000 --> 00:25:33.000

We're gonna shift to Q. A. And just a couple of minutes here.

00:25:33.000 --> 00:25:37.000

But, Alicia, I want to come back to you and ask a question You've talked about.

00:25:37.000 --> 00:25:38.000

Costs, and so, with many increasing calls, small businesses, you know they wrestle with changes and expenses and their own pricing strategies.

00:25:38.000 --> 00:25:53.000

Thanks, statements.

00:25:53.000 --> 00:25:58.000

Yeah, no, it's a good question, because I've certainly seen firsthand how much it's changed.

00:25:58.000 --> 00:26:00.000

The economics of people's businesses, and 2 ways.

00:26:00.000 --> 00:26:07.000

One is people are always talking about like Wow, what used to cost me 30 cents last month now is costing me 40 cents. You know.

00:26:07.000 --> 00:26:11.000

There's the inflation is real, and that is impacting the unit.

00:26:11.000 --> 00:26:16.000

Economics of businesses, and then the other way is with supply chains.

00:26:16.000 --> 00:26:24.000

You know the the supply chain, disruptions, and the supply chain just length, that you know, being spread out in terms of time, has real financial implications.

00:26:24.000 --> 00:26:35.000

so I think that you know, in in those situations my view is transparency is best, because when you're talking to any lender, not just danger.

00:26:35.000 --> 00:26:47.000

We're trying to any lender, you know, if they're willing to say yes to you on a loan based on information that is not accurate or information that was not fully disclosed.

00:26:47.000 --> 00:26:51.000

It's not It's gonna come back to bite you right like it's not gonna end up.

00:26:51.000 --> 00:27:00.000

Well, if a lender is, is giving you a loan based on information that's not fully accurate so I think it's much better to say look I'm in a bind.

00:27:00.000 --> 00:27:05.000

Here's the situation, you know I have. Xyz commitments that I've made. Now.

00:27:05.000 --> 00:27:08.000

This supplier increased this cost. I still have all these customers.

00:27:08.000 --> 00:27:12.000

They're really excited about this product, but I now have.

00:27:12.000 --> 00:27:19.000

I'm having this pinch, because my, you know my costs have gone up in those situations.

00:27:19.000 --> 00:27:32.000

I you know, work with the founders. We try and figure out how to how to adjust things right, because if you come to me as a lender, and you say all those things are true, then I'm gonna say, okay, well, let's say, what's the new reality, in terms, of what it's doing to your

00:27:32.000 --> 00:27:35.000

profitability. Well, what does that mean? Does that mean? Can we change the price, you know?

00:27:35.000 --> 00:27:38.000

Is there flexibility on pricing? How do we think about?

00:27:38.000 --> 00:27:49.000

Is there other places where we can cut costs, so it becomes a dialogue about How do we get to the right output that we both want, which is a sustainable business right?

00:27:49.000 --> 00:27:59.000

That's what we will both want, if might least successful, Dainty's successful, dainty, successful, I'll be able to help lightly more. It's There everything. Is very symbiotic.

00:27:59.000 --> 00:28:19.000

So I think, having these conversations is really important, and I think people are sometimes founders are sometimes afraid to share the bad news with their investors, and I think I, I as an investor who does both lending and and equity.

00:28:19.000 --> 00:28:23.000

Investments, I can tell you. I am always trust the founders more.

00:28:23.000 --> 00:28:28.000

Who come to me and proactively say, I've got a problem.

00:28:28.000 --> 00:28:37.000

Can you help me? I'm in a bind. Then the ones who every time you talk to it's like everything is rainbows and unicorns, because you don't trust that It's always right.

00:28:37.000 --> 00:28:41.000

It's that's just not That's not the reality of startup world.

00:28:41.000 --> 00:28:47.000

Things don't always go well. There's always bumps in the road, so I just I encourage transparency.

00:28:47.000 --> 00:28:55.000

I encourage honestly, and if you find the right lenders, you find the right investors, they will work with you because they will be successful.

00:28:55.000 --> 00:29:01.000

If you are successful, and that's why you know the way, dainty. We've structured our loans.

00:29:01.000 --> 00:29:05.000

We want to make sure, our incentives are always aligned with the founders.

00:29:05.000 --> 00:29:10.000

I saw a couple of questions in the in the chat about kind of rates, and some of those details.

00:29:10.000 --> 00:29:11.000

I'm I'm happy to talk about that, because I think it all you know foots together.

00:29:11.000 --> 00:29:16.000

How do you recommend a company work with or lender investor during challenging economic times?

00:29:16.000 --> 00:29:17.000

Absolutely. Yeah, thank you, Alicia. Let's jump right into our questions.

00:29:17.000 --> 00:29:20.000

I don't know if you want to go on to a different subject, though Jessica

00:29:20.000 --> 00:29:21.000

We have quite a few that have come in so we're going to try to address this many as we can, and the time that we have a lot, it we have about 14 min.

00:29:21.000 --> 00:29:36.000

Yeah.

00:29:36.000 --> 00:29:40.000

Yeah. So there are loans in general available to nonprofits.

00:29:40.000 --> 00:29:56.000

Dane tree does not provide loans to nonprofits, and and it's not because we won't in the future, but it is because limited amount of capital trying to focus on a really narrow investment thesis which is getting investment capital to female and other underrepresented

00:29:56.000 --> 00:29:57.000

founders, and were just focusing on that part of the market, because there are other sources of capital available for nonprofits.

00:29:57.000 --> 00:30:04.000

So the first question is, are any of the loans available to nonprofits

00:30:04.000 --> 00:30:05.000

Yeah. Thank you. Another question is, what is the process? Time for a $20,000 micro loan?

00:30:05.000 --> 00:30:18.000

So it's just we're not there yet.

00:30:18.000 --> 00:30:26.000

So let me talk about all those things together. So our process is relatively fast, because we're small. Right? We can.

00:30:26.000 --> 00:30:36.000

We can turn things around quickly. So once the founder has gotten us all the information we need, the 4 financial documents I mentioned, the references, etc.

00:30:36.000 --> 00:30:43.000

Once we have all that information, all we can turn a decision around in a few days, and usually, you know, cash can change hands.

00:30:43.000 --> 00:30:46.000

We know, within a week or 2. So that is, that is fast.

00:30:46.000 --> 00:30:51.000

What usually flows it down is more the you know. The founders are still pulling together.

00:30:51.000 --> 00:31:02.000

The financial information, etc. So process can be very fast. Once we have the information in terms of the rates, and I saw someone else asked about like shopify and other sources.

00:31:02.000 --> 00:31:17.000

There are lots of lending options out there, and some of them are fantastic, and they are low rates, whether like the CEO or the Corralis loans, like, they're 0% doesn't get any better than that the Eidl loans that are like 2% over 30 years you know, a

00:31:17.000 --> 00:31:20.000

lot of the Sba loans. A lot of these loans are amazing.

00:31:20.000 --> 00:31:29.000

What I hear again and again is Yeah, those industry? Loans are great, But it was for you know this much money, and I need this much money, you know they it just doesn't.

00:31:29.000 --> 00:31:36.000

It doesn't go around So what we've done with with Dane trees loans is, we've said, Okay, we're living in a different part of the market.

00:31:36.000 --> 00:31:39.000

We're a for for-profit business ourselves.

00:31:39.000 --> 00:31:43.000

I am a founder to running my own business. So we are.

00:31:43.000 --> 00:31:51.000

We are for profit, business, charging, market rates, but we're designing everything to be found or friendly, and by founder friendly.

00:31:51.000 --> 00:31:55.000

What we mean is some of the things I mentioned, so there's no collateral.

00:31:55.000 --> 00:31:59.000

There's no prepayment penalty, which is really important.

00:31:59.000 --> 00:32:13.000

Because if you find your way to cheaper capital, if you find a nonprofit 0% interest rate loan, And last month, you took out a dainty loan at a higher rate by all means repay the dainty loan take the cheaper capital.

00:32:13.000 --> 00:32:16.000

I don't ever want founders to feel locked in to expensive capital.

00:32:16.000 --> 00:32:30.000

So so that that is always an an option. So, in terms of that, and then in terms of the no collateral in the case of default, which knock on wood we haven't had yet but it.

00:32:30.000 --> 00:32:41.000

Will happen, instead of chasing someone down in a collections process or a legal process where that's antagonistic where we say, you know, I'm gonna hunt you down till you repay my loan.

00:32:41.000 --> 00:32:58.000

We Take the unpaid portion of the loan, and we turn it into a safe note, and the whole idea again is that we want Dane trees, incentives, and the company's incentives to be aligned We want to continue to work together to make sure that the company is successful and our hope is that it is

00:32:58.000 --> 00:33:06.000

a loan that is repaid. But if something goes wrong we'll convert it over to a safe note, and then we have an incentive to want your company to still be successful.

00:33:06.000 --> 00:33:10.000

In the long term. It's just a different type of investment.

00:33:10.000 --> 00:33:20.000

So that's what I mean by being founder friendly in terms of the actual rates We charge our interest rates on an annual basis are between 10 and 15%.

00:33:20.000 --> 00:33:25.000

we stay below 15%, because we always want to be cheaper than credit card debt.

00:33:25.000 --> 00:33:27.000

We don't want to compete with anything above above that.

00:33:27.000 --> 00:33:36.000

We're just not in that market, and our rates are not below 10%, because these are unsecured loans with early stage companies, you know.

00:33:36.000 --> 00:33:42.000

So they're just they're higher risk. So you know, shopify capital. And some of these other ones.

00:33:42.000 --> 00:33:45.000

They can be amazing and fantastic. They can have some great rates.

00:33:45.000 --> 00:33:50.000

What I understand from founders is, it's usually not enough money.

00:33:50.000 --> 00:33:57.000

And, by the way, the reasons why they're rates can be really low is because they suck the money out before you ever see it. Right.

00:33:57.000 --> 00:34:07.000

So if you're doing $10,000 a month on the shopify platform, they can suck $2,000 out of that for your loan payment before you ever see the money.

00:34:07.000 --> 00:34:13.000

So they really have no risk. Right? They get every dollar first before you get any dollar.

00:34:13.000 --> 00:34:16.000

So it's a low-risk proposition for them.

00:34:16.000 --> 00:34:22.000

They can have low rates. As a result which is great for the founders use all of those sources.

00:34:22.000 --> 00:34:23.000

Go, take the loans out. It's awesome. But it may not get you as far as you need to go, And so then that's where Dane Tree steps in, where we have different options that can plug the gap for some things that maybe you need to do that you know for whatever reason that

00:34:23.000 --> 00:34:44.000

What is the average interest rate for micro loan, and which credit score is use, business or personal

00:34:44.000 --> 00:34:46.000

Thank you. Alicia. Wow! You shared so much good information.

00:34:46.000 --> 00:34:49.000

I wish I could take notes on all this, But where're recording it?

00:34:49.000 --> 00:34:55.000

So it is captured. The next question is actually more of a scenario based question.

00:34:55.000 --> 00:34:59.000

So it's my company is new. 2 years for the work I do.

00:34:59.000 --> 00:35:00.000

I've been doing for over 20 years, but for other companies, when applying for grants loans, I'm finding that most companies want you to have at least 25,000 in revenue already.

00:35:00.000 --> 00:35:18.000

you're not qualifying on some of the lower interest rate loans for

00:35:18.000 --> 00:35:22.000

So there are some, and what I would tell you, and and on you.

00:35:22.000 --> 00:35:40.000

You probably have some thoughts on this, too. I often hear about people having success when you're a brand new brand new company with some of the local organizations in their city in their county, in their state because there's a lot of incubators there's a lot of quick grants there's, a

00:35:40.000 --> 00:35:49.000

lot of geography, specific resources where they want you to start a company in their city or in their county, or in their state, and so I would encourage you.

00:35:49.000 --> 00:35:57.000

If you're really at that phase where you're either pre-revenue or less than 25,000 in revenue, to look at like the local Chamber of Commerce.

00:35:57.000 --> 00:36:12.000

The local. You know, Economic Development Bureau, the all of them have different names and different geographies and I would also encourage you to start looking at Boot camps and accelerators and incubators because a lot of those come with resources.

00:36:12.000 --> 00:36:21.000

And sometimes they come with Grant money, or sometimes they come with, you know, cash, you know, in exchange for equity a percent of your company.

00:36:21.000 --> 00:36:28.000

So I would look at some of those options when you are pre-revenue, or very, very early on in revenue.

00:36:28.000 --> 00:36:38.000

My opinion is, debt is, is better; for when you have revenue, because you need, you need some cash in order to pay off the the debt, and so getting into debt before.

00:36:38.000 --> 00:36:46.000

You have revenue can create a challenge for you later on.

00:36:46.000 --> 00:36:55.000

various thoughts, so so even the Sba. Unless you get kind of a and then the Spa has some special programs.

00:36:55.000 --> 00:37:00.000

So I'd encourage everyone with a new business to look at special programs for the Sva.

00:37:00.000 --> 00:37:07.000

But even the Sba might may come back for a regular spy loan, and say, you know you need 3 years of business reports.

00:37:07.000 --> 00:37:10.000

We we went, or don't take my word for it.

00:37:10.000 --> 00:37:14.000

I talked to the Spa people, but I we went instead.

00:37:14.000 --> 00:37:15.000

When I called the Sba. When we started out, they said, No, you're not eligible, but you should talk to community your local community development. Foundation.

00:37:15.000 --> 00:37:23.000

I don't know, Anya, what thoughts you have on that

00:37:23.000 --> 00:37:33.000

So the community development foundations, at least in California are essentially micro loans as an Sba for bigger small businesses.

00:37:33.000 --> 00:37:39.000

Community development foundations for smaller bulk, smaller smaller small businesses.

00:37:39.000 --> 00:37:43.000

So we went there first, and we were able to get 2 loans from there.

00:37:43.000 --> 00:37:50.000

the one in San Francisco is called working solutions, but they're they're all over, and they are in every State.

00:37:50.000 --> 00:37:59.000

I should not say they're just in California. What putting my global hat on here, though, is when you're at least an inventory based business and Sometimes not.

00:37:59.000 --> 00:38:04.000

You have 2 things to consider. Is it, or is it not personally guaranteed?

00:38:04.000 --> 00:38:16.000

And, by the way, if it's married, your person, if you are married and you're personally guaranteeing it, that kind of needs your spouse is also personally guaranteeing you so that's a conversation that you should, have with your spouse.

00:38:16.000 --> 00:38:24.000

Before you go signing papers, and then, in addition for inventory businesses, often the Sba.

00:38:24.000 --> 00:38:32.000

And these community development foundations will put Ucc. Leads on on your product, on your inventory.

00:38:32.000 --> 00:38:42.000

that is just a piece of paper, unless you were to say, Go out of business, and then they could come in and take a hold of that inventory.

00:38:42.000 --> 00:38:46.000

But one issue is is that lenders don't like stacking.

00:38:46.000 --> 00:38:51.000

Ucc leans, so you can't necessarily go out and get one loan with the Ucc.

00:38:51.000 --> 00:38:55.000

Link here, and then the next load with the Ucc Lean.

00:38:55.000 --> 00:39:00.000

Here, so so where are you? Take out loans? How you take out loans?

00:39:00.000 --> 00:39:10.000

You should be very strategic about it, and and especially if they have a Ucc lean or a personal guarantee, you know.

00:39:10.000 --> 00:39:11.000

Do I need this money? Is this the best place for me to get it?

00:39:11.000 --> 00:39:21.000

Or their grants out there for companies making $20,000? Or will I have to wait until I get to that bracket

00:39:21.000 --> 00:39:25.000

Thank you, Anya. So I know that we are running short on time.

00:39:25.000 --> 00:39:28.000

We have about 4 min left, and I still want to ask you all a couple of questions.

00:39:28.000 --> 00:39:29.000

But I'm going to summarize some of the questions, and it's going back to the requirements that you mentioned Alicia for Dean Tree. Capital.

00:39:29.000 --> 00:39:48.000

Just

00:39:48.000 --> 00:39:56.000

Sure unit Economics was the last one of the 4, and I think it's in the chat now, too, and just to remind folks of the unit Economics confuses people.

00:39:56.000 --> 00:40:04.000

Unit economics is really just understanding what is the profitability of your business at the product or service level.

00:40:04.000 --> 00:40:11.000

So whatever the fundamental thing is, you're selling, What is the profitability at that at that level?

00:40:11.000 --> 00:40:12.000

So those are the the 4 things, and they're in the chat, And then sorry.

00:40:12.000 --> 00:40:17.000

So what are the 4 requirements? Again, income statement, balance, sheet bank statements, and what are the other requirements? And can you talk a little bit more about the pitch deck

00:40:17.000 --> 00:40:19.000

What was the next question? Jessica

00:40:19.000 --> 00:40:24.000

So I did see a question in here that just mentioned the pitch bulk

00:40:24.000 --> 00:40:31.000

Oh, so a pitch deck is what most investors will ask for equity investors.

00:40:31.000 --> 00:40:34.000

It's kind of their the currency they operate in.

00:40:34.000 --> 00:40:35.000

Send me your pitch checks. I'm your pitch deck.

00:40:35.000 --> 00:40:39.000

We don't require a pitch deck if you have one.

00:40:39.000 --> 00:40:44.000

I always like to see it, because it's generally a great overview of your business.

00:40:44.000 --> 00:40:50.000

So we do ask if you have one that you send it, because it's a It's a quick way for me to understand your business.

00:40:50.000 --> 00:40:55.000

But it's not a requirement, and you would also ask that business plan is the other thing people ask about.

00:40:55.000 --> 00:40:58.000

Do you require a business plan? No, I don't require a business plan.

00:40:58.000 --> 00:41:05.000

I do work, that you're able to clearly articulate to me, What's the problem you saw in the market?

00:41:05.000 --> 00:41:08.000

What's the solution? You're bringing to bear against that problem?

00:41:08.000 --> 00:41:12.000

And what are the economics of your business? If you can walk me through that verbally?

00:41:12.000 --> 00:41:15.000

That's fine. I don't need it. In a word document.

00:41:15.000 --> 00:41:17.000

I don't need in a Powerpoint, but I need to be.

00:41:17.000 --> 00:41:21.000

I need to feel that it's a compelling, and it's not just the, you know.

00:41:21.000 --> 00:41:28.000

Hey? I you know, got stuck at home and had this idea, and I didn't do any market testing and I'm not sure who's going to buy it.

00:41:28.000 --> 00:41:29.000

I Need to really understand that those are a viable business.

00:41:29.000 --> 00:41:31.000

It's Yes, yes.

00:41:31.000 --> 00:41:38.000

There.

00:41:38.000 --> 00:41:48.000

Yeah, absolutely. So our websites. The best starting point. And if you go to Dane Tree, capital, I'll put it in the in the chat.

00:41:48.000 --> 00:41:52.000

But that's the best starting point, and there's a form on our website.

00:41:52.000 --> 00:41:57.000

That is, it's called lone inquiry, and it's just super short.

00:41:57.000 --> 00:42:02.000

Less than 2 min gives us the basic information on your business, gets you into our system.

00:42:02.000 --> 00:42:03.000

We'll send you information about. So you don't if you don't have the notes of what did I have to submit?

00:42:03.000 --> 00:42:11.000

Awesome. And one last question the big question: How can a business connect with you on your programs Alicia

00:42:11.000 --> 00:42:21.000

Thank you so much And, anya, I'm gonna actually like you have the last word.

00:42:21.000 --> 00:42:25.000

Well, first of all, our our website is mighty.com.

00:42:25.000 --> 00:42:32.000

So just go check it out. Holidays are coming up, but my one piece of advice is that there?

00:42:32.000 --> 00:42:34.000

I'm going to put my lawyer hat on here.

00:42:34.000 --> 00:42:44.000

There are some bad actors out there, and once you put yourself out in the community as a woman in business, I have got an email saying, Hey, I'm ready to write you a check.

00:42:44.000 --> 00:42:53.000

You just need to send me all your financial information if it is too good to be true, it is too good to be true, and you actually do need to be careful about this.

00:42:53.000 --> 00:42:54.000

Sometimes they specifically target women businesses, because we may not have the background and sophistication.

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If you can get just one piece of advice to the women entrepreneurs on the line, what would that be?

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Wow! Thank you all so much. Thank you, Anya. Thank you, Alicia, for sharing your experiences with us.

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It's been wonderful to have this conversation with you I want to thank all of our participants for joining us, and if we did not answer your question, I do want to make a note that we have captured those questions and we will be responding to you, Via, email this does conclude our session, thank

00:43:30.000 --> 00:43:37.000

Hello! Everyone. Let's no

00:43:37.000 --> 00:43:45.000

Right? Fantastic. Okay, thank you. To all of our speakers and our lenders on.

00:43:45.000 --> 00:43:49.000

Yeah, Mike Lee, That was fantastic. I personally love might Lee.

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You can find them on the W. Marketplace. I love the quality, and so my kids appreciate the comfort so definitely check them out.