Can social impact and venture capital co-exist harmoniously? Startups are rewarded for exponential growth rather than sustainable growth, “disruption” rather than true societal impact, competition rather than collaboration. When venture capitalists hear the words "nonprofit" or "charity" they will quickly dismiss them. As the name suggests, "nonprofit," surely has no connotation that suggests profitability. However, one female founded team, has shown it is possible to do well and do good.
Rachel Renock is the CEO and Cofounder of Wethos, the first socially conscious freelance platform that connects nonprofits with skilled professionals that care about their cause. At the SheWorx100 Summit, Rachel met her lead investor at Brooklyn Bridge Ventures. She has now raised a total of $1M in her pre-seed round which included Pipeline Angels, Corigin Ventures, Flybridge Ventures, as well as a few other notable angels and VCs.
"We believe that nonprofits simply deserve better than having to rely on pro-bono, and by giving them access to a large pool of talented individuals we can flood the sector with the affordable resources they need to keep changing the world," said Renock.
Wethos has a unique and passionate team that's driven by their desire to create a positive impact. A year ago last spring the founding team was working in advertising and freelancing on the side for nonprofits. They realized what a massive disparity there was in the space and how inefficient and difficult it was for these organizations to find individual contractors for their immediate project needs,
"and that's when we set out to create a new economy, one where you can do good and make money and those things are no longer mutually exclusive."
It was an uphill battle for Renock to raise her first round of funding who had all of the cards stacked against her.
"As a first time founder, a woman, and a member of the LGBT community, it's safe to say we were up against all odds when it came to raising money, but SheWorx did everything in their power to make sure they created a safe space for us to bring the potential of our company to the table, meet well established investors who were there to take us seriously, and give our company the chance to succeed."
I chatted with Renock and she shared her ups and downs during the fundraising process and the most important lessons she has learned.
You just closed your first round of funding. Congrats! As a first time founder, how did the fundraising process compare to your expectations?
My expectations when raising money is that it would be fairly straight forward, business is business after all. The truth is fundraising is an emotional process on both ends, you have to connect with your investors, and it was always easy to tell when we met someone who really "got" what we were doing. The main things we realized is that we had to convince people of somewhat intangible things since we were so early and we didn't have our own data to back it up, only educated hypothesis based on research. We learned that we had to sell the size of the market, the idea, and our ability to execute by any means necessary. At such an early stage that's what most people are betting on, and the further we got down the "data" rabbit hole the less convincing we sounded. We know we have what it takes to build a successful company, and proving that to investors was more psychological than anything else.
What were your biggest challenges?
Some of our biggest challenges were convincing investors that there is money in the nonprofit space and working hard to dispel the stigmas people have when they talk about charity. Charity is often viewed in a dismissive or condescending way, and it's no coincidence that a sector made up of 74% women struggles to be taken seriously. The truth is, these organizations are actively up against our toughest problems, poverty, homelessness, hunger, etc., and yet they have access to the least amount of resources. For us, raising this round was about telling a new story about the nonprofit space, the real story of how important they are to our economy.
What milestones are you most proud?
First and foremost I'm most proud to launch this company into the world. In our 6 month beta period we acquired 250 nonprofit organizations and 1,000 freelancers on-site exchanging work together. It's a pretty incredible thing to watch so many people find work they love, and get so many nonprofits the extra set of hands they so desperately need. We're also a team of 3 female founders and I'm a member of the LGBTQ community, so with those obstacles I'm also extremely proud to have raised $1M in pre-seed funding from some of the most established and respected VC firms and angels in NYC. We know that money won't solve our problems it will only change them, so now we're ready to push this company forward and have a real impact on the world.
What attracted you to the SheWorx community? What has been the most valuable part about your SheWorx experience?
I heard about the SheWorx community through another investor who suggested I check it out. I found the community to be incredibly thoughtful, helpful, and truly inclusive of everyone. The event I attended that secured my lead was well organized and I loved that I was able to target the investors I wanted to pitch to and prepare beforehand. The most valuable part of SheWorx is how much credibility it has and that I was confident walking in that I would only meet investors in the community that were truly allies, and I didn't have to worry about someone being off-putting like I did at many other events.
One piece of advice for other female founders fundraising?
Some of the best pieces of advice I got while fundraising were from other female founders.
1. Be yourself. I know that sounds ridiculous but it's true, don't try to be what you think anyone wants you to be or hear, walk in with your head high and be unapologetically you. I closed the last portion of our round wearing an ACDC t-shirt, but it didn't matter because people respond to someone when they're being authentically themselves, and old band t-shirts are exactly who I am.
2. Get to "no" as soon as possible. The second best answer an investor can give you after a "yes" is a quick "no". Don't let people string you along or be lukewarm, be direct, ask direct questions, get clarity and transparency whenever you can. Rejection is tough but rejection after 2 months of working is much tougher to take than after a week.
Some questions I used to move us through the process with VCs: "What is your investment process like?", this gives you an idea of how many people have to say yes in order for someone to write you a check, and will give you a better idea of timing if they are really interested. "Are there any other materials you'd like me to send you?" This helps move the diligence process along, your company should get more interesting to someone the more information they have, if they start doubting you or asking a million questions you may start to lose them and try to pivot back into the big picture. Especially when you're early stage, you might be judged on proof but you have to try and sell the potential instead. "What is your typical check size" will give you insight into if this is a possible investment or not. If their check size is 2M and you're raising 500K, you know there's no point in trying to be persistent. Being persistent is important but be smart about where you spend your energy. It's awkward asking people for money, so get comfortable being uncomfortable. Oh and read Venture Deals, it's seriously a life saver.
Want to know more? Connect with Rachel and the Wethos team on social: