Karen Cahn Wants You To Ask For More Money (and Fail Cheaper)
May 11, 2017 | Filed in: Woman of the Week
Fundraising for a startup can seem daunting—even impossible—and with good reason: If you’re a woman, your odds of success are very low. Enter Karen Cahn, the founder and CEO of iFundWomen, a crowdfunding platform that helps women raise the cash they need to grow their businesses. A former bigwig at AOL and YouTube (and early Google employee—she knows how to pick ’em), Karen has devoted the better part of her career to helping women get paid for doing great work. We recently visited her office to talk money, confidence, and 10:00 p.m. bedtimes.
TEACHING WOMEN TO ASK FOR MONEY is the most gratifying thing I’ve ever done. I would do it for free—well actually, I wouldn’t, because that would run counter to what we stand for. The idea of women being paid for their work has always been a focus in my career. When I was running branded entertainment at YouTube back in 2007, I realized I was out there selling eight-figure deals for brands with male creators, because there weren’t enough female creators that had scale. And I said, “I’m not going to bust my hump making all this money for male creators. They’re doing just fine on their own. Instead, I’m going to make money and connections for female creators.” I didn’t say I was focusing on women, because all my bosses were guys and the female creative economy was not exactly popular back then, but I became obsessed with the idea of the female creative economy and women getting paid for the creative work they were doing.
iFUNDWOMEN IS MY SECOND STARTUP; I got the idea for it when my first startup was running out of money. We needed to grow our business, so we did a Kickstarter in July of 2016. We got our Kickstarter funded because I literally cold-called everyone in my network and sold them what they wanted to buy. I had PTSD about that experience, and I kept thinking about all the things that could have made it better. It also made me realize how hard it was for women to get funding for their projects—you had to weed through all the white boys and their toys to find them. Ultimately, there was a real need for a crowdfunding platform for women that would provide advice, community, help with video creation, budgeting, planning, and all the basics. One didn’t exist, so we created it. The “aha” moment happened fast, but my whole career led up to it.
OUR GOAL IS TO LEVEL THE PLAYING FIELD for venture financing. It’s going to take us years, but we’ll do it. We are working with high-performing entrepreneurs with great ideas who are working hard but cannot squeeze any more money out of their personal networks. It’s my mission to get more money into that pool. Women are the fastest-growing entrepreneurial sector, and women of color are the fastest-growing sector within that, but we’re starting from ground zero in terms of fundraising. Women currently get two-six percent of venture funding, and women of color get .2 percent—it’s horrifying. If we try to get a bank loan, guess what? We get smaller loans for higher rates than men do, and it’s even worse for women of color. I always tell women, “Do not take a second mortgage out on your house for your startup. Do not get a loan to fund your prototype. There’s nothing worse than your startup failing and then owing money to the bank on top of it.” I am brutally honest with every female entrepreneur I talk to. It may be unpopular, but I would rather be the person telling the truth.
AS WOMEN, WE HAVE TO PROVE SO MUCH MORE before we get a seat at the table. So many women come to us, especially out of business schools, and say with such shame, “I’ve been trying to raise a round of venture funding for two years, and it’s not going anywhere. I may have to do crowdfunding as a last-ditch effort, and it’s so embarrassing.” I understand that mindset, but I believe that you should do crowdfunding first, before venture funding, to prove there’s a need for your product. Fail cheaper. Through crowdfunding, you can get marketing, PR, and people using your product and telling you what they think of it. To raise venture funding, a woman has to take it to the next level. She not only needs a working prototype, but also customers and revenue—whereas men just need a great idea and be white. It’s awful, but historically, it’s true.
WOMEN ARE TAUGHT TO PUT UP THIS VEIL of strength and polish and experience, and I don’t think it serves us, as a community, to look at other women who seem to have it all together. I think it’s important for women who are out in the public and acting as mentors to be forthcoming about their journey. It’s a delicate balance. Do we want certain things out there in the world for people to pick at? No, but at the same time, I think there’s a lot of value in being honest within certain communities.
WOMEN ARE NOT CONDITIONED TO ASK FOR FUNDING. When we do ask, we ask for less, and we don’t think we deserve it. We were not brought up to go out and raise money or talk about it. Personally, I gained the confidence to found a startup because I was an early employee at Google and made money in the IPO. That gave me financial freedom and a nest egg. All my basic needs were met: I paid off my house, I could pay for my kids’ college, and I can retire. I learned that when women have financial freedom, we gain the power to make our own decisions in our own lives. If you can’t ask for money, and you can’t go out and get money—whether it’s by asking for a raise or fundraising for your startup—you’re never going to get ahead.
I WAS AN AFRICAN-AMERICAN STUDIES AND U.S. HISTORY MAJOR in college. I never took an economics, finance, or business class. I thought I was going to be a history teacher! I was about 25 when I went to Google. I didn’t even know what an IPO was, and I knew nothing about the venture world or the stock market. However, I had done my research; I understood that the internet would be all about making people click on things and then buy stuff afterwards, and that search was what converted on media plans. I sent my resume to only three companies. I’m not going to say I was lucky, because I think that’s bullshit—I was very purposeful, and smart enough to know what I was doing in terms of the market that I’m in. With this ability to start my own company, I feel it is my civic duty to pay forward all the information I’ve learned to women who have no access to it.
I’M NOT GOING TO PAINT A ROSY PICTURE—the first year of a startup is all-consuming. I’m not meditating, which I know I should. I’m not doing yoga, which I love. I’m a single mom trying to be there for my kids. I’m probably getting a B-minus or a C-plus in that department right now. In terms of taking care of myself, I’m a big believer in 10:00 p.m. bedtimes, and flat shoes. I’ll wear heels for a meeting, but otherwise it’s flats.
I WANT ALL OF THESE WOMEN TO GET FUNDING, and they’re not all going to. It’s business, and not everyone will succeed. To be candid, my heart beats fast in the middle of the night—it’s stressful, because there’s only so much we can do. We can’t play God. But it’s very hard for me to shut it off. When a campaign that I’m really passionate about is not doing well, my heart breaks a little bit. But then the next day someone else will shock me and get a lot of funding out of nowhere. It’s a roller coaster.
Photographs by Maria Karas.