How this investing platform is helping women businesses in the locked-down economy and beyond

Roshawnna Novellus, EnrichHER founder and CEO, joins Yahoo Finance's On the Move to talk about how her platform is connecting women-led businesses with investors.

Video transcript

JULIE HYMAN: Well, we all know the Paycheck Protection Program has given a lifeline to some small businesses, but not all of them. For some of them, it hasn't been enough. And not all of them have had access to it. There are, of course, other ways to invest in small businesses. And joining us now is someone who can help you do that. Roshawnna Novellus is the founder of EnrichHER.

It's based-- she is based in Atlanta, Georgia, I should say. And this is part of our Women in Money segment brought to you by USAA. Roshawnna, thank you for joining us. So EnrichHER is effectively an investment club, right, where people can put their money, pool together, put their money into small businesses. Am I understanding correctly? And how does it work? What kind of interest have you been seeing right now?

ROSHAWNNA NOVELLUS: That's exactly right. Funders can decide to put philanthropic capital, investment capital, and in terms of loans or equity behind underinvested founders from across the US. We launched at the beginning of 2019. And within the first six months, we received over 3,000 applications from business owners in 47 states to be on our platform. So there is a lot of interest to get this funding.

ADAM SHAPIRO: Can you tell us about after the funding came in and the interest about maybe one of the companies that got some of this funding and where they've gone with it?

ROSHAWNNA NOVELLUS: Yes, I can. So the very first company we funded was founded by Barbara Jones. And she built an IT consultancy called Lilly R&B into a $1.2 million company. She had clients such as Home Depot and the Gap, but still couldn't access working capital to hire a new employee.

We were able to fund her company, and shortly thereafter, she closed an additional $300,000 loan. And by the end of 2019, she grew her business to $4 million in revenue, when she started that year at $1.2 million.

DAN HOWLEY: Roshawnna, where did the number of investors come from? I know you said there's philanthropic investors. And then how do you get the companies that need the funding to the platform?

ROSHAWNNA NOVELLUS: There's so many companies that need funding that they find us. Any entity or institution that serves underinvested founders attracts those founders. But we have partnerships with entrepreneur support organizations across the country to get the word out, and we do a lot of promotions on different platforms.

In terms of the funder side, some funders want a tax write-off, so that would be the philanthropic direction. And some actually want a return on their investment. So what's new about our platform is that we can have funders who have different goals with the money that they have and allocate that money to well-deserving founders of companies.

JULIE HYMAN: And Roshawnna, something that we haven't dug into as much is that you specifically focus on women-led and minority-led companies. So there's sort of a democratization on the funding side, because I believe-- maybe you can talk about with the minimum investment is and then also an attempt to sort of even the playing field on the companies that are receiving it, as well. How does all of that work?

ROSHAWNNA NOVELLUS: Exactly. So EnrichHER focuses on gender-diverse teams. Those teams can be run by women CEOs or CEOs that are black or people of color. And because I am a black woman, a lot of people seek EnrichHER because it's a safe space where I reflect the community that we serve.

And so funders who say, hey, yes, I want more women out there with more economic power, hey, I want more people of color out there with economic power can come find us and decide how they want to allocate their capital. In terms of the minimum allocation size, it varies, depending on the type of investment that they want to do.

So for instance, if a company is seeking equity investment, that's different and it's based on the round of that company, whereas if they want to lend to the cohort, that is a different amount. But all the information is available on our site at Enrichher.com.

RICK NEWMAN: Hey, Roshawnna, Rick Newman here. This is a perilous time to be investing, especially in small companies. So what are you finding about your investors? Are they getting cold feet? Do they want to wait it out and see if these companies are even standing after the recession? How is this recession affecting everything?

ROSHAWNNA NOVELLUS: So the good news about that company is on our platform is that all of them have had increased demand during this pandemic. So all of them have shown the resiliency and the ability to sustain the current environment.

And we selected those kinds of companies specifically because we understood that investors would be more leery based on the current risk and the number of businesses that are exiting. But all of the companies that are featured on our platform have increased growth in this current market.

JULIE HYMAN: Roshawnna, thank you so much. Roshawnna Novellus is the founder of EnrichHER. Thank you.