018 | Leveling The Playing Field for Female Leaders with Melissa Widner

Being a female founder is hard. Raising capital and retaining control of your company is harder when only 2.6% of all venture capital goes to female-founded startups. And the cost of getting that capital is giving up your equity in your company. That's why I sat down with My Good Woman, Melissa Widner, the CEO of Lighter Capital. 

Melissa deeply understands the entrepreneur's journey and the role a funding partner can play in developing a business. As CEO, Melissa led two companies to successful exits returning more than 10 X to her investors. 

She was the founder and CEO of Silicon Valley-based 7 Software and the Managing Director of NAB Ventures, the VC arm of the National Australia Bank. She led NAB’s investments into high-growth fintech, including Lighter Capital, the pioneer and leader in revenue-based financing for tech startups and scale-up.  And if that isn't awesome enough for you, Melissa is also the co-founder and chairperson of Sydney- based Heads Over Heels, an organization supporting women entrepreneurs running companies with high growth potential. 

In this episode, Melissa and I discuss

• Leveling the playing field for female founders
• Equity or debt? Which is better when you're building your business?
• How revenue-based financing works as opposed to venture financing
• How to retain ownership of your company amidst rapid growth

This episode at a glance:

[04:54] There are people that become very successful entrepreneurs, even in their forties or fifties, who wouldn't have seemed to have had an entrepreneurial bone in their body as a kid. 

[13:10] Revenue-based financing leverages the strength of women. Women tend to be good at creating relationships, which means they can build community. That would build on that angel funding.

[20:54] I realized timing is something you can't control, but often it's what determines success.

[26:23] We connect our companies to senior business leaders willing to open up their networks because they want to see the numbers change. They want to see more women growing their businesses.  

Resources and links:

• Lighter Capital
• Heads Over Heels
• Silicon Valley Bank
• National Australia Bank
• Canva

You might also like

• 4 Must-Read Leadership Books
• Annual Business Goals Workbook
• Why Female Leaders Supporting Each Other Is The Future

More about the “My Good Woman” podcast
My Good Woman is a podcast for bold female leaders hosted by me, Dawn Andrews! Grab a seat at the table for candid conversations with culture-shifting, glass-ceiling-busting, trailblazing women who are leading enterprises that are making a change in the world.

Want to increase revenue and impact? Listen to “She's That Founder” for insights on business strategy and female leadership to scale your business. Each episode offers advice on effective communication, team building, and management. Learn to master routines and systems to boost productivity and prevent burnout. Our delegation tips and business consulting will advance your executive leadership skills and presence.

Transcript

My Good Woman 
 Ep. 18 | Leveling The Playing Field for Female Founders

Dawn Andrews [00:00:00]

 Being a female founder is hard. Raising capital and retaining control of your company is harder when only 2.6% of all venture capital goes to female founded startups. And the cost of getting that capital is giving up your equity in your company. That's why I sat down with My Good Woman, Melissa Widner, the CEO of Lighter Capital. 

Melissa deeply understands the entrepreneur's journey and the role of funding partner can play in the development of a business. As CEO, Melissa led to companies to successful exits returning more than 10 X to her investors. 

She was the founder and CEO of Silicon Valley based 7 Software and the Managing Director of NAB ventures the VC arm of the National Australia Bank where she led the banks investments into high growth fintechs Including Lighter Capital, the pioneer and leader in revenue based financing for tech startups and scale-ups And if that isn't enough awesome for you Melissa is also the co-founder and chairperson of Sydney- based Heads Over Heels, an organization supporting women entrepreneurs running companies with high growth potential. This week we got together and talked about leveling the playing field for female founders. Equity or debt which is better when you're building your business. How revenue based financing works as opposed to venture financing. And how to retain ownership of your company amidst rapid growth. Enjoy my conversation with My Good Woman, Melissa Widner.

Dawn Andrews [00:02:35]
Well, welcome to My Good Woman, Melissa Widner. I'm so excited to have you here with us today.

Melissa Widner [00:02:40] : Thanks Dawn and I'm really excited to be here.

Dawn Andrews [00:02:42]
I got to stalk you a little bit on social media, which was delightful and enlightening. I was especially excited to invite you here to talk about women founders raising capital, getting started in finance as a woman. So to kick it off, where did you get your start? How did you come to be in this space?

Melissa Widner [00:03:03]
Yeah, well I was an entrepreneur from a young age. You don't have to be a young entrepreneur to be an entrepreneur. But I was an entrepreneur from a young age. I had a little business when I was in college, but then I ran a turnaround company right out of college, that was a 40 year old company, and turned that around, made a really good return, 15 x return for the investor. And then I went to business school and learned about finance, did an internship at Goldman Sachs and learned more about finance and technology companies. And started a technology company in my second year of business school, an enterprise software company.

That was sort of the entrepreneurship piece. And then that had a successful exit and I ended up, becoming a venture capitalist in the US and then moving to Australia and becoming a venture capitalist in Australia. Now I am the CEO of Lighter Capital, which is the pioneer in this revenue based financing space for startups. And it's something that I just love, I love our product and it's sort of a culmination of everything I've done in terms of angel investing and some banking and venture capital and entrepreneurship coming together to this one place.

Dawn Andrews [00:04:06]
It sounds like, sounds like you came straight out of the shoot as an entrepreneur, to be so accomplished, so young. Do you attribute that to your family where you came from? Were you always interested in business? How did that happen?

Melissa Widner [00:04:19]
Yeah, I was very entrepreneurial. I think my neighbors would close their windows and pretend they weren't home. Cuz my friend and I were always selling, building little things, making little things and selling them to the neighborhood.

So I was, but I went on to study entrepreneurship. I taught it for a year at University of Washington's Graduate School of Business. And when I studied it, what I found is that a lot of very successful entrepreneurs weren't entrepreneurs at all as kids. We love to tell those stories about, I did have a little business when I was 10 years old and they had a business when I was in college doing hair accessories But that's not a required path. There are people that become very successful entrepreneurs, even in their forties or fifties who wouldn't have seemed to have had an entrepreneurial bone in their body as a kid. I was always thinking of businesses to start from as long as I can remember, and my parents aren't entrepreneurs, so I'm not really sure where it came from.

Dawn Andrews [00:05:09] 
Divine gift I guess. I mean, It just sounds like it's your creative genius. You know, everybody has something that speaks to them, a natural affinity towards something, and it just sounds like that's where your curiosities lied and you kept following it, and here you are. 

Melissa Widner [00:05:22]
Yeah, that's probably right. I think I was really interested in how to make pocket money as a kid. And when my parents got divorced, when I was young, I had an economic change of circumstance. And I actually think that can be very motivating. I've given my kids a very stable life, so they don't have that, they don't have that motivation. But I think that was part of the motivation as a kid is just to have pocket money.

Dawn Andrews [00:05:45]
I share that with you, Melissa. My parents divorced when I was seven and I ended up being the person that was responsible for the family finances, for paying attention to the checkbook and, by the time I was nine. I knew how to balance a checkbook.

I'm glad for the skill. It certainly is one of those, lifelong skills, but I definitely would've traded it out for for some other things at the time. Well so tell me little bit about what you love about your work now with Lighter Capital. 

Melissa Widner [00:06:10]  
Well, part of what I love, or mostly what I love is the same thing that I loved about my work as a venture capitalist and that is I get to spend my days working with the most fascinating people on the planet, truly, entrepreneurs and startup entrepreneurs. And I get to spend my days helping them in the way, they, need the most help, and that's financing. I love what we do at Lighter Capital and the revenue based financing side compared to what I did at venture for a long time, which I also loved as well.

But in the venture capital world, you're saying no 99 times for every time you say yes. And you're saying no to great entrepreneurs who have really good ideas, but venture capitalists typically fund 1% of all deals they look at. Whereas at Light Capital, we fund everything that fits our criteria and our criteria is objective and it's public. So if we can't fund a company, we let them know exactly why and we'll fund every company that wants to take our money if they meet our criteria. 

Dawn Andrews [00:07:13]
Let's do a little compare and contrast. A lot of my listeners are female leaders. They are women in business, many are founders. Share with the listeners the difference between, you're a founder, you have a great idea, and you need money to make that idea a reality. You have the option of venture based financing. You have the option of revenue based financing. You can bootstrap. Would you describe those different financial options for somebody that's looking to start a business and thinks that they wanna take on investment from somewhere else besides just out of their own pocket?

Melissa Widner [00:07:46] 
Yeah. So first of all, we're on revenue based financing a company has to have revenue, so our minimum criteria is $200,000 in ARR, annual recurring revenue. We're not funding companies at the idea stage because we get paid back. We don't take equity. We don't take any control. We're paid back a percentage of the revenue until essentially the loan is paid off. So we're looking at revenue. So if it's just the idea stage, this isn't an option. Venture might be an option, Um, if it's a really great idea with a track record, you might find a venture capitalist to fund that. But typically they're really early idea stage companies, they're being funded by the founders themselves, or friends and family, so sweat equity.

Our average customer, when they first take money from us, has a million dollars in revenue. Now, like I said, they only have to have $200,000 in annual revenue, but the average typically has about a million. And, we also fund companies that have 10 million in revenue, and we've done over a thousand rounds of financing. But, I'll just take this one scenario. So say you're a company you've bootstrapped or maybe had a little angel investment and now you're up to a million dollars in revenue. You're ready to hire some sales people. You know, maybe the founder's been doing all the sales, so they're ready to take on some money and they have an option to take on equity financing or debt. You should always take debt if you have the option. Unless you need more money than you can get from debt. So if you're a million dollars in revenue, we can provide you with about a third of your revenue at that point, $300 to $400,000. And if you're saying, I'm a million, I need $10 million now, that's going to be the venture path. There's, not a debt path there because you wouldn't be able to service that kind of debt. 

Dawn Andrews [00:09:23]
That's a good distinction to make for people to really understand, in the growth path of their business from idea stage through seed and, Series A, but what I'm hearing here is a great bridge path to be able to prove even further the concept of your business and give it a fighting chance to grow before people already have their stake in it and are taking a piece of it 

Melissa Widner [00:09:44] 
Right. Or maybe, wanting some control over, the strategy. and we have example after example of that. And I can, I can give you a couple, but, just going back to why you would take debt over equity. Let's just say you need $400,000 and you can take it in equity or you can take it debt. You should always, always, if you can take it in debt, do so. Unless the debt's going to be onerous to service, meaning, you could put your company at risk And, and revenue based financing, our companies pay us a percentage of their revenue.

It's a small percentage. It's usually under 10%, and it's their cash collected revenue. And they pay that until the loan's paid off. So if they grow really quickly, it gets paid off faster. If they grow slower or go out of business, it might not get paid back. So there's not this onerous debt burden because it's based on the cash that you're collecting. And another reason you might take equity, remember if it's the same amount, you need 400,000 and you can get it with debt or equity. You might take equity if you're going to get a lot more from that equity provider because you're giving away, part of your company and a lot of times you're giving away some control.

But if they're going to, provide a lot more that it's worth whatever you're, giving away 10, 20% of the company, then that would be a reason to go down that path. I want to, make clear that this isn't an either or, especially in the early stages. Oftentimes we're coming in with angel investors where a company might wanna raise a million dollars, they'll take a half from angels and a half from us.And we love that. We love to see equity support. a lot of the companies that we fund don't have it, but we love to see equity support and that does happen often. And to your earlier point, Lighter Capital has done over a thousand rounds of financing, so we've seen a lot of different scenarios, but, a couple come to mind.

One, I think it's on our website right now, is a company called Flip. They were called Red Route and they took money from us when they had a million in revenue. They took a few rounds of financing from us and then they went out and raised money from venture capitalists. We actually helped introduce them to one of the venture capitalists that funded them. That's something that we do as well, we help companies get ready for that. They didn't have to take any dilution to get from 1 million to 3 million in revenue. I don't know what the value their valuation was when they raised money, but let's just say 10 x of ARR.

 So if they had raised money when they had a million in revenue, their value would've been 10 million. And if they raised money at 3 million in revenue, their value is 30 million. So they were able to get from 10 million to 30 million with no dilution. And you take that to an exit, the founders and the early investors who are in will end up doing a lot better because of that. And then we have that story over and over again. We have the Seamless AI founders. They're fantastic. They're a company that took money from us when they were 30 million and grew with our money to over 20 million in revenue.And so the founders stand up at our CEO summits and say they're worth hundreds of millions of dollars more because they did this funding early on as opposed to taking dilution. 

Dawn Andrews [00:12:35] 
I particularly love this idea, for female founders because, as you know, of all venture capital available, at least in the US I don't know how it is in other countries, but of all venture capital available female founders receive around 2.6% of that. And that means, you were talking about in your venture capital life, past life that you were saying no more than you were saying Yes. No, 90% of the time even, which means that women are hearing no, no, no all the time. And I think that following the path that Lighter is suggesting, that you're suggesting, it leverages the strength of women. Women tend to be good at creating relationships, which means that they can build community that would build that on that angel funding. 

They can retain the ownership there. And then as they build proof of concept and recurring revenue for their business, then they're in a place where they can meet you up and continue to grow. I'm very passionate about women being able to build their own paths, not that there's anything wrong with following the prescribed path or what's been laid out before, but I don't find that it's very friendly towards women as evidenced by literally by the numbers. Like 2.6% of all venture financing is such a small percentage. So this is a great and interesting way to leverage the natural strengths I think, of women and be able to give them that possibility of a much bigger exit and to retain the vision and ownership of their business. Because one of the things that happens is you take on equity is that you take on more people, more opinions, more direction, which can be beneficial. But it also can mean that all of a sudden you're no longer CEO of your company anymore.

Melissa Widner [00:14:08]
Yeah. Yeah. And, what something you said, is really interesting on just female funding. It's something I followed closely as a venture capitalist. I co-founded an organization in Australia called Heads Over Heels that supports women entrepreneurs running companies with high growth potential. And heads over heels has supported over a hundred companies now, and it's backed by e ey, NAB and Macquarie and Steadfast, and it's now backed by big corporates. But what's interesting is as a venture capitalist, when you ask a venture capital capitalist what they are looking for in investment, what do you think the primary thing they say is? 

Dawn Andrews [00:14:44] : They probably say the team.

Melissa Widner [00:14:46] 
Yes, the team and the team is totally subjective, right? And there's so much unconscious biases that go into the team. The team is subjective. And we all have those biases. I had biases as an venture capitalist that you aren't even aware of necessarily. You're looking for pattern recognition and if you're looking for who's going to succeed in this venture back world... 

Dawn Andrews [00:15:07]
Part of the job is naturally to have biases because you are probably receiving a volume of pitches and people, et cetera, and then , you need to, sort through it.

Melissa Widner [00:15:16]
Yeah. So in our, our credit criteria, our underwriting criteria, it's completely objective. It only is subjective for companies that are on the margin where, if it doesn't quite fit or it's just on the edge of what we would fund or we then can maybe take into account. This is like the Two or three time entrepreneur. We should maybe push them over. But for the most part, it's all data driven. We look at the numbers. We look at customer churn. You know, there's 650 points of data we look at before we make a decision. And it's mainly driven by their financials that we pull from both their bank account and their accounting platform.

So the application process is like 10 minutes. Super simple. But what happens. What happens is exactly what you think would happen in that case, because we're not looking at team at all, team is not one of our criteria, that we end up funding a lot more women than venture capital firms fund. And a lot more minorities than venture capital firms fund. Because all we're looking at is the numbers. 

Dawn Andrews [00:16:14]  
Because you take it off the table I was doing some research. There's a Harvard Business study that was done recently where they had men and women-- so they created a pitch for a business deck and all, and they had a group of men present it to a group of funders and they had a group of women present it a group of funders. The exact same pitch, deck, et cetera. The men, on multiple occasions, I think it was like 10, 10 shots for each team to present and different funders each time. So it wasn't like the funder heard male and a female team but over 20 funders, 10 the men presented to 10 that the women presented to the women were funded one time, and the men 10 outta 10. Same data, same numbers, same pitch, same deck, same everything. And they just wanted to hear from a male voice and. You know, you can't be mad at it. We're all trying to learn. We're all trying to get better, but what I'm really enjoying about what you're sharing is just that it's another pathway, another opportunity that has more space for lots of different potential business owners. 

Melissa Widner [00:17:17]
And I think what the nice thing is, it's changing really slowly, it's changing. But it is changing. And I've been very frustrated for a lot of my career that on the check writing side, there's very few women and that's not changing as quickly as it should, but it's finally changing. I mean, you're not going to find a lot of funds that don't have some women on the investment team, even if they're not necessarily partners yet. Whereas 10 years ago you would've seen that all the time, most of the time. And now, you just can't exist as a fund of a certain size and get LP money if you don't have some diversity.  So that's a change. That is a big change. 

[00:17:57] DAWN ANDREWS - MW: I'm glad you're seeing that it's nice to hear from somebody who's out in that world that, that's what's happening, and it gives me hope. 

[00:18:02] MELISSA WIDNER- MW: Yeah. and I think, you know, because we're all looking for pattern recognition on the VC side, again, Lighter Capital, not at all. We're looking at the data.

[00:18:09] MELISSA WIDNER- MW: We will fund companies who meet our criteria, and we don't take any equity or any control. But on the venture side, because team plays so much into it, and because that is a subjective measurement, it's tough. But, we're seeing more and more examples. I'm in Australia right now and, our most successful unicorn right now is a company called Canva worth tens of billions of dollars, it's still a private company, but it's run by a woman. And so I think that's changing things.

[00:18:35] DAWN ANDREWS - MW: And it is used by a woman. I'm raising my hand over here. I'm a Canva power user.

[00:18:40] MELISSA WIDNER- MW: Oh, great. So, you know, that bias in Australia will, be like, oh, we wanna make money, invest in a young woman. Cuz I think Melanie was in her twenties when she started it. But, um, so, so we are seeing change, which is great

[00:18:53] DAWN ANDREWS - MW: For Lighter Capital funding, you talked about annual recurring revenue are the majority of the kinds of companies that you fund, SaaS companies, software as a service.

[00:19:02] MELISSA WIDNER- MW: Yeah. because we have to be able to predict the revenue. So we have a standard term loan too. If companies just want a fixed payment, most companies want that downside protection.

[00:19:11] MELISSA WIDNER- MW: So if things go wrong or if their revenues are seasonal, they don't have a big loan payment to service. We just have to be able to predict the revenue. And that's typically companies with recurring revenue and typically software as a service. But with over a thousand rounds of funding we have funded other types of companies.

[00:19:29] MELISSA WIDNER- MW: We funded subscription box companies, those have done well. We funded other ones that are more on the consumer side, but there's some predictability in terms of, the revenue and their customers are repeat customers. 

[00:19:40] DAWN ANDREWS - MW: So here you are this is your goal. I'd be curious to hear if you were starting from scratch what business space would you go into and how would you go about building the business and funding the business? And I know I'm springing this on you, so, I know this is a surprise question, but I'd be curious, you know, what would you do? What space would you go into and what would you build? 

[00:20:00] MELISSA WIDNER- MW: Yeah, well I can even talk about how I did it with 7 Software and I was in business school when I did it and I started it in my second year, going to my second year of business school. It was a software company, so we couldn't have done revenue based financing at the time.

[00:20:13] MELISSA WIDNER- MW: Well, one, revenue based financing didn't exist, but we wouldn't have qualified cuz we didn't have revenue yet and didn't have the type of revenue. but we initially funded it, with consulting revenue. So we did some consulting, some project work, and then we got some angels who had great connections but also had, had built enterprise software companies before.

[00:20:34] MELISSA WIDNER- MW: So who were really helpful. 

[00:20:35] DAWN ANDREWS - MW: What was the actual product or What were you building towards? What was it doing?

[00:20:39] MELISSA WIDNER- MW: We were automating procurement for corporations. So taking away the manual piece of, generating a PO and, getting the information of the vendor and getting the item shipped. And we're really early in that space and then we ended up in the hottest space.

[00:20:53] MELISSA WIDNER- MW: This is where I realized timing timing is something you can't control, but oftentimes probably most of the time is it's what determines success. Especially on the exit side. But we were acquired by a company called Concur Technologies, and then Concur went public and became a very large company.

[00:21:09] MELISSA WIDNER- MW: So we did luck out on timing cuz we were probably, one of the furthest ahead in our space when we, when our space was all of a sudden got very hot. 

[00:21:17] DAWN ANDREWS - MW: I remember using Concur back in my olden times corporate job. Did you see that space to begin with? Is it something that you were passionate about or how did you come to land on that idea to 

[00:21:30] MELISSA WIDNER- MW: pursue. 

[00:21:31] MELISSA WIDNER- MW: Yeah. So that idea, I was the CEO and the co-founding partner was the CTO who was at Microsoft. And he created this product for internal use at Microsoft to automate Microsoft's procurement internally.

[00:21:43] MELISSA WIDNER- MW: And they would trot him out to say, here's what you can build with Microsoft technology. And they would trot them out to their customers to say, "you can build these types of products. Here's a product we built and it saved us 35 million dollars internally."

[00:21:57] MELISSA WIDNER- MW: And the customers would say, "where, oh, where do we buy this?" And Michael said, "no, no, no. We, we don't," you know, this is when they weren't selling enterprise software. They said, "we don't sell this. We're just kind of showing you if, you know, use SQL and some of our other tools what you can build." 

[00:22:07] MELISSA WIDNER- MW: So I had run a, um, prior to business school I had run a, industrial supply company. So I really understood the procurement. You know, we had over a thousand SKUs and I understood that pain point. 

[00:22:17] DAWN ANDREWS - MW: You were probably struggling with it. 

[00:22:19] MELISSA WIDNER- MW: Yeah. We were a smaller company than we were selling to when we were at 7Software. But, so I, I got that immediately and it was obvious there was a business there. And I think at the time I was working at Goldman Sachs doing an internship and looking at all these tech companies and saying, oh, this is really interesting compared to manufacturing. To me it was very obvious that there was a business there and a need there, which doesn't mean it's easy to do at all. It's really hard to start a company. and,

[00:22:44] DAWN ANDREWS - MW: What were some of the challenges that you faced So you and your cto, co-founder, that's the two of you, you're doing some consulting to raise some pocket money to continue to grow the business. What were some of the challenges you faced? 

[00:22:55] MELISSA WIDNER- MW: Fundraising was, a challenge. Customer aquisition, of course is a challenge 

[00:23:00] DAWN ANDREWS - MW: How long was it? Just the two of you? 

[00:23:02] MELISSA WIDNER- MW: Uh, it wasn't the two of us for very long. Pretty early on we brought a couple other people in on the developer side. But it was the two of us mostly when it was concept and we were still getting some money in on the consulting side. But we brought people in on the developer side pretty early and then we all, we brought somebody in who, quite early to do the implementation cuz we had some early customers. So that was really helpful. It's funny cause I think when I look back, it seemed very difficult at the time, but then after we sold the company and I became a venture capitalist and worked with, a lot of entrepreneurs who were really smarter than I am, worked longer and harder at their business than I did and didn't have that same kind of success, same kind of exit. And I think that's because a lot of it has to do with timing. So in terms of being in the right space at the right time and then having the right product and the right people. 

[00:23:54] MELISSA WIDNER- MW: In terms of what was the most difficult, I, I would say it's easier for me to talk about what was the most helpful and the what was really the most beneficial piece. And it's, it actually leads to why I went on to, start Heads Over Heels I was part of a network there called Forum for Women Entrepreneurs. This was, we started the company in Silicon Valley. And when I look at a lot of good things that happened with 7Software, it happened, from connections I made through Forum for Women Entrepreneurs.

[00:24:20] MELISSA WIDNER- MW: So we started Heads Over Heels after I moved to Australia in 2010 with the idea of, how do we fast track these connections for women? You know, there's all of this, there, there's a lot of educational opportunities. Learn how to pitch, learn how to, do everything else you need to do with a startup. But women in general aren't as well connected as men, in terms of business connections. So how can we fast track that? And when I think back to what really helped me with 7Software. I think, wow, that was really great that this guy Carey Timbrell at Goldman invested in us. And then he introduced me to Ken Arnold, who became an investor and he was a successful enterprise software entrepreneur who introduced me to the person that did our marketing.

[00:24:58] MELISSA WIDNER- MW: So it's just plugging in, expanding your network and plugging into a network that can really help your business grow. Cuz you never know where that connection is going to make a difference. And it's something that we do at Lighter Capital, I think we do well and are doing even better.

[00:25:14] MELISSA WIDNER- MW: We have CEO groups. We have our CEO Summit. we've done over a thousand rounds of financing and mostly to B2B SaaS companies. So questions that our current Portfolio has, or struggles they're having are probably something that someone else in our portfolio has dealt with and is willing to share.

[00:25:31] MELISSA WIDNER- MW: Cuz our companies aren't necessarily in competitive spaces for the most part. what we do, I think really well and are getting better at is forming those connections. Cause I think there's probably nothing more valuable for an entrepreneur than learning from other entrepreneurs.

[00:25:44] DAWN ANDREWS - MW: Well, let's get granular for a second. Like, when you talk about fast tracking those connections, obviously being able to see two different sides of a conversation and being able to bring them together is something that can happen. But how do you aid and or coach your founders to be able to make use of that introduction? Because if they knew how to do it not only to make the connection, but use it, they probably would've done it already. So how, what advice do you give them or how do you help them to leverage that introduction? 

[00:26:10] MELISSA WIDNER- MW: So this goes to the heads over heels side, cuz this is exactly what Heads Over Heels does and has been doing it for 12 years. This is the, not for profit in Australia that helps women entrepreneurs that are running high growth companies. What Heads Over Heels does is we connect our companies to senior business leaders who are willing to open up their networks because they want to see the numbers change. They wanna see more women growing their businesses. And it's actually quite simple on the connector side, on the senior business leader because it might take them a minute or two. It's an email introduction. But you know, Dawn if you're making an introduction for me, I'm probably a lot more likely to get a response than if I just go cold to somebody. So first get that warm introduction. That's not always a possibility, but try to get that warm introduction. Help with that introduction. Write the introduction. You know, say, " I'd like this introduction and here's what you could say, edit it if you want", but write it. So really it's just a click and send for the person making the introduction. And then, I mean, the basic is follow up. I mean, this is something we, we know follow up when you're asking somebody for that follow up and let them know what actually happened with that.

[00:27:21] MELISSA WIDNER- MW: And then, just, share your network. Find the more you share your network and the more you help entrepreneurs that, the more it comes back.

[00:27:27] DAWN ANDREWS - MW: Love it. Tell me a little bit about some of the other challenges that some of your founders face. What are you helping them with? 

[00:27:34] MELISSA WIDNER- MW: Customer acquisition is something that everybody is focused on. Right. And then there's a hundred things in a startup stay from like, best time to hire, what systems should you have in place for anything? Right. And that's really helpful. When you think of what's the most valuable asset an entrepreneur has, it's their time. So anything we can do to make them more efficient is helpful. 

[00:27:58] DAWN ANDREWS - MW: Is that something that happens through Heads Over Heels or is that something that Lighter Capital is also providing along with the financing? 

[00:28:04] MELISSA WIDNER- MW: Both. Yeah. And it's funny, there's some crossover, some Heads Over Heels companies have taken financing from Lighter. But in both cases it's really a network of entrepreneurs helping each other. the way we can help more is making that information public so that's things like Slack channels and CEO groups, that kind of thing. But, but of course I would say the biggest, challenge that any startup has or any company has oftentimes is financing. So, we're providing financing, but we're capped at what we can provide because we can provide a percentage of their monthly or a multiple of their monthly recurring revenue for larger companies up to six times their monthly recurring revenue.

 if companies do want to go on and do a venture round, we help them with their pitch and we'll help them with warm introductions. We can't get them funded, but we can get them warm introductions. 

[00:28:52] DAWN ANDREWS - MW: I love it. Okay. Well, tell me a little bit, what do you love about this space in particular? , you've been in a founder position, you've been in an exit position, you've been in a venture position. Now you're in the the revenue based financing position. Do you feel like this is your spot? Is this somewhere that you feel like you wanna stay? 

[00:29:07] MELISSA WIDNER- MW: This is my spot. Absolutely my spot. 

[00:29:10] DAWN ANDREWS - MW: So what is it about it? 

[00:29:11] MELISSA WIDNER- MW: what I love about it is, like we talked about earlier, is that we just say yes all the time. And it's, here's the money. For companies that fit. If they fit our underwriting criteria and if they don't fit we'll tell 'em why. there's no black box here. It might be you don't have enough revenue, your customer concentration's too high, but you'll know exactly why. Or, maybe you don't fit now and you will later, but here's the money and now how can we help? 

[00:29:36] DAWN ANDREWS - MW: Yeah. it's really remarkable feedback. It's great feedback for a founder to be able to get, because if they're in a position to be financed, great. But if they're not, then that's really clear direction on where they can spend their time and energy to be able to improve , and grow.

[00:29:49] MELISSA WIDNER- MW: For our type of financing. For venture, it might be different or you know, oftentimes it is different. The reason I love it is because we're saying yes all the time. Here's the money, if you fit our criteria and now how else can we help? We're not taking a board seat, not taking any equity, there's no control. We know the founder's most likely the one with the best vision for the company. We don't get involved in that at all. We are, here's the money. We want you to grow faster, cuz that's better for us. You're not gonna pay us back more, but if you pay us back faster, cuz you grew faster that than we predicted, that's great for us and great for you. 

[00:30:20] MELISSA WIDNER- MW: So how can we help you? Look it is an absolute privilege to be able to spend time with the most fascinating people on the planet, startup founders. That is just an absolute privilege. I'm so lucky to do that. And everyone in this space, the space of the startup ecosystem space feels the same. You're spending time with creative people who are going against the odds and they're what makes the world go around and what makes all the positive changes happen. I love that piece of it. venture has that piece as well, but you just get to do this a lot more often and in a lot friendlier way. 

[00:30:53] DAWN ANDREWS - MW: It's nice to be in a spot where you get to say yes more than no ,

[00:30:56] MELISSA WIDNER- MW: Absolutely, absolutely. 

[00:30:59] DAWN ANDREWS - MW: Well, I'm curious, how do you nurture your network? How do you take care of the people that you're connected with how do you nurture them?

[00:31:05] MELISSA WIDNER- MW: Well, this is something looking back, I, probably have always done naturally. Cause I'll talk to some friends that, you know, I had when I was 10 years old and, um, we moved around a bit when I was a kid, and they'll say, I remember you were helping me with this, I just was always, I was the campaign manager for school elections. I would try and figure out who's going to win and then I would try and help them in one. So I, so I liked that supporting role. So I think I actually really love being able to help people and realize their dreams. So I'd say it's just, something that, I like to do. So when you think about nurturing a network, you know, I mean, when you and I met last time, I probably asked, what else are you looking for?

[00:31:43] MELISSA WIDNER- MW: And is it something I can help you with? And I just enjoy it. 

[00:31:46] DAWN ANDREWS - MW: You have a natural gift for Melissa because I was like, oh my gosh, we had this 15 minute chemistry call and I feel very supported afterwards.

[00:31:54] MELISSA WIDNER- MW: Well, thank you. Thanks. 

[00:31:55] DAWN ANDREWS - MW: Yeah. Well, and just to be clear so that people on the other end know. Because I would say that my desire is that my network feel that supported and that they'll feel nurtured. Maybe sometimes they do, maybe they don't. I wouldn't say that it's like a natural strength of mine. To be transparent, about how so Melissa, and I met. We had a 15, 20 minute phone call to get to know each other a little bit before we had this conversation, just so we could be related to one another.

[00:32:20] DAWN ANDREWS - MW: And Melissa, she was equally as curious about me as I was about her. And I'm saying that to make it present for people who may not realize what it takes to be able to nurture a relationship, that there is a natural curiosity. You asked me questions about my business. You asked me, about my, foundation that I wear on my face when I'm on Zoom.

[00:32:38] MELISSA WIDNER- MW: You have a glow. Yes. 

[00:32:40] DAWN ANDREWS - MW: Iris and Romeo, y'all, that's the tick. But you asked a lot of questions and you genuinely were curious. I feel like if there was one takeaway that listeners could use to be able to develop their network and help grow their business, whatever their business looks like, it is being naturally curious about the other person. And I think what happens sometimes when you're in a growth phase for, well, you're never not in a growth phase for a business, otherwise you're not building a business. I feel like it happens more for women, is we get so concerned about whether we've got our pitch buttoned up, whether or not we're good enough, whether what we have is good enough.

[00:33:14] DAWN ANDREWS - MW: We kind of get into our psychology and our heads a little bit too much. And when we're meeting with others, we're actually spending more time in our own heads assessing ourselves instead of connecting. And the way out of that is just to literally be curious about the other person. And I experienced that with you, and it left me feeling really supported. So for those out there that are looking to grow their network, maybe looking for financing, maybe looking for mentorship or other advice that they need to grow, curiosity is key. you're you're a walking

[00:33:43] MELISSA WIDNER- MW: you're 

[00:33:43] DAWN ANDREWS - MW: example of that. 

[00:33:44] MELISSA WIDNER- MW: Oh, thank you.I've seen a lot of people who are great at networking and they don't think of it that way cuz it's almost easier if you're not thinking of it that way. I I love what you said in terms of just a natural curiosity and, a natural, desire to help people. I think if people, there's people who, what is the phrase? It's sort of, it's glass half empty, glass half full. But it's do you believe in a world of scarcity or do you believe in a world of abundance?

[00:34:10] MELISSA WIDNER- MW: And I'm living here in Sydney, Australia, half the year, Seattle, the other half of the year, I get to spend my time working with entrepreneurs. I have four great kids. I'm healthy. Like, how could I not believe in a world of abundance. Like this is, if you're not believing in a world of abundance, when you have this life, then you're probably, not a super positive person. But I do, think if you were to try and put everybody in those two boxes, which of course you couldn't, the people that believe in the world of abundance are probably great and natural networkers. 

[00:34:39] MELISSA WIDNER- MW: versus the world of scarcity. Yeah. So anyway, that's a whole other conversation.

[00:34:43] MELISSA WIDNER- MW: You should do a podcast about that. Dawn 

[00:34:45] DAWN ANDREWS - MW: It's coming. It's coming. I'm curious, does Lighter have a pipeline to bring in the potential companies that they work with, or is there enough awareness about Lighter that you're sort of batting them away? 

[00:34:58] MELISSA WIDNER- MW: we assess lots of companies every day and every week. And sometimes we'll get a hair salon apply and that's not what we do.

[00:35:06] MELISSA WIDNER- MW: So there's a lot of companies that come in our pipeline and we have something on our LighterCapital.com/apply where, I don't know, that maybe takes 20 seconds if you're a slow typer, that'll kind of say, look, you might be a fit, or you might not be a fit now. But our biggest challenge has always been just educating the market that this exists, that this type of funding exists, and, it's becoming more widely known.

[00:35:30] MELISSA WIDNER- MW: We started in 2010 and it's definitely in the last few years become more widely known. Which is great. But that still is the biggest challenge, that entrepreneurs know. I think there's this connotation that, oh, debt's bad, but it's actually better than equity cuz you're not giving away control.

[00:35:45] MELISSA WIDNER- MW: And if it's debt the payback is based on your revenue, so it's affordable and it's fixed in terms of the total amount you're going to pay back. Then it actually is a great way to grow your business. So just getting out the, mechanisms for how this works. I recently, guest lectured at both Columbia and Berkeley in their business school. 

[00:36:03] DAWN ANDREWS - MW: Oh, that's great that's a great way to get out there.

[00:36:06] MELISSA WIDNER- MW: Yeah, no, it was really good. But what was interesting is that the students had so many questions and these are really sophisticated students in this, these were both classes on venture financing, so they knew about that space, but it's just not a space that people necessarily know about.

[00:36:21] MELISSA WIDNER- MW: So I'd say one of the biggest challenges is really just getting the word out. 

[00:36:24] DAWN ANDREWS - MW: What are the three main things that you'd want people to know about this type of financing? Cause the first thing that came to mind for me or the first question and it's a simple one is just how is this different from a bank? Why would I choose this as opposed to just you know, getting a loan from a bank? 

[00:36:38] MELISSA WIDNER- MW: if you could get a loan from a bank, it's gonna be a lot less expensive than ours. 

[00:36:41] DAWN ANDREWS - MW: So, amen to that. Go for it. Yeah. 

[00:36:44] MELISSA WIDNER- MW: you probably should, yeah. Well, banks a lot of times they're gonna want personal guarantees. Sometimes, I mean, our loan is almost nothing to service, you know, we're connected. It's pretty simple. There's not financial covenants or that kind of thing, which you do have to do with the bank, but banks won't, for the most part, aren't going to lend to the companies we provide capital to cuz they're not profitable, they don't have hard assets. The founder's not going to put up a personal guarantee. So we're not competing with banks. That's not our competition. 

Their tolerance for risk is incredibly low. There's not a lot of space there. 

[00:37:16] MELISSA WIDNER- MW: Yeah. And two of our biggest equity investors in Lighter Capital are Silicon Valley Bank and National Australia Bank. They invested into Lighter Capital because we're funding companies, they can't yet, but they're companies they'd like to have a relationship with. sometimes we get companies that will get money from a really creative bank and typically those companies are profitable. They've, you know, willing to put up some personal guarantees. But I'd say 99% of the companies we fund banks would not fund them. we're an alternative financing option and we exist because banks aren't funding these types of companies. 

[00:37:51] DAWN ANDREWS - MW: Yeah. Well, you found the space again, similar to the procurement space that we were talking about earlier. Like if we could take it away in a nutshell and just lather, rinse, repeat, so that people could fully understand the existence of, and the benefit of revenue based financing, what would you tell?

[00:38:05] MELISSA WIDNER- MW: Um, you're not giving away equity or control. you can grow your company and maybe eventually you will, you might eventually take venture, but if you can grow your company to a certain point, so you have a lot more choice in terms of who's going to fund you and at what valuation.

[00:38:18] MELISSA WIDNER- MW: So this is really about, once you have revenue, it's a great way to finance your company without giving away equity or control. 

[00:38:24] DAWN ANDREWS - MW: So I would love to shift gears and just talk about you as the CEO of this company. Even in the world, there aren't that many female CEOs. Where do you put your time and attention? Because in any startup, in any business time is always the most challenging resource to manage. What is your life and times look like as the CEO of Lighter Capital? 

[00:38:44] MELISSA WIDNER- MW: Well, as you can imagine, the CEO of any small company, we have 35 people. It's, diverse things you do on a daily basis are really diverse.

[00:38:52] MELISSA WIDNER- MW: But, the primary, if I had to divide it sort of into three areas, it would be, and in this order, team first and then customers, and then our investors and other stakeholders. We have a great group of investors. And we recently raised a round that was, we raised it with debt, we were eating our own dog food, so we, you know, a little bit of a warrant, but mostly debt.

[00:39:14] MELISSA WIDNER- MW: And it's from, some of our previous customers but people who are out there in the startup ecosystem. So I spend time, with them as well, making sure they understand what's going on with the business. But on the team side, I was really lucky. I didn't found Lighter. I was, I went on their board in 2018 when National Australia Bank invested in the company and then became the CEO in 2020.

[00:39:36] MELISSA WIDNER- MW: I was just so fortunate to step into a great culture and such a great team. So that's where I spend a lot of my time. And we went fully remote after the pandemic. I think we have people in eight countries now. And focusing on how to make sure we have that connectivity and we have that strong culture even though we're not coming into an office every day. That's a big chunk of my time. 

[00:39:59] DAWN ANDREWS - MW: What are you finding works well for that these days? What's working well for your organization? 

[00:40:04] MELISSA WIDNER- MW: We do two offsites. We just started this in September 2021 cause that was the first time you really could come together. And even that time was kind of iffy. So we've had three since then, but we do two a year. And we all come together and, for three days it's about kind of intense bonding, I would call it. We, of course we do our strategy and all of that, but it's really about getting to know each other and building those relationships. So when we do go through hard times as a company, which we will, we have those stronger ties. So that's one of the things, you know, we're always looking for creative ways to, create more connectivity among the team. 

[00:40:42] DAWN ANDREWS - MW: What have you found has been most effective in building that connection? Like literally, would it be, is it bowling night out? out? What happens that has been effective for you?

[00:40:50] MELISSA WIDNER- MW: A bowling night out would be tough because we're in eight different countries. But really, I think the offsites are really good. This happens spontaneously because actually she's in your neck of the woods. Our head of product, our offsite, two offsite ago, she brought a karaoke machine and a strobe light, and she just did karaoke, started karaoke on the last night and she cannot sing and she cannot dance. But she started it and then the whole company by the end of the night, everybody had done it.

[00:41:18] MELISSA WIDNER- MW: And so we just, we have fun, we have a lot of fun together when we're together. That's not something that was even planned. So I don't know how to, you know, other than just, create that atmosphere where things like that can happen. I was really lucky to inherit a good team and just trying to keep it together. And, I think being in Australia for a while has been really good for me. The first company I ran, before business school, I took one vacation in five years and that was it. Australians have a different attitude, yet they're pretty productive still to, you know, how there's gotta be a balance. And one of the things I noticed when I went into Lighter Capital is that their policy, which is pretty common actually in startups in the US now, is unlimited leave. I thought, oh my gosh, wow. If they had that in Australia, no one would show up. I mean, that's not true, but everyone has four weeks leave. In Australia, you have four weeks leave from the time you start and, four weeks leave even you're the CEO of a large corporation. 

[00:42:08] DAWN ANDREWS - MW: That's just what you have, yeah 

[00:42:09] MELISSA WIDNER- MW: That's typical and a lot of people will take it, just what you have. Some companies have five weeks or something, but for the most part it's four weeks late and people take it. But I noticed that, Lighter Capital had this unlimited vacation policy and people weren't taking it though. It may be part of the culture was you don't take it or you, when you take it, you're on. I know from personal experience that, the downtime is when you're most creative and you need that to be good at in the uptime. So one of the things we did is we implemented a bonus for people who take vacation.

[00:42:40] MELISSA WIDNER- MW: It's not much, but we'll give people $500 if they take a week off and don't check email. And if they check email, they don't get the money . So we really try and we try and celebrate it, encourage it, and I don't wanna say shame people who aren't taking it, but we call people out like, Hey, you haven't taken it yet. So we, we, Wellbeing is good for the people, but it's good for the company too. And, and we really believe in that.

[00:43:00] DAWN ANDREWS - MW: That is incredible. On so many, levels. First of all, I'm ready to come work for Lighter Capital cuz I want my 500 dollar don't check my email bonus. 

[00:43:09] MELISSA WIDNER- MW: Yeah. 

[00:43:10] DAWN ANDREWS - MW: But just the fact that, oh, it kind of breaks my heart a little bit that people feel like unlimited vacation is a trap. that the takeaway that we've instilled year over year in people's work lives is that you're being set up if you decide to take time away. 

[00:43:25] MELISSA WIDNER- MW: yeah, yeah. So, I think that, you know, just look, it's a lot easier being a CEO later in life than early in life when you're trying to prove yourself by, working, nonstop and getting your whole team to work nonstop. And you think that that's the path to success. And I would say, things change, a little things change and you're nothing without a good team and you don't have a good team if you don't have a good culture. So when you ask where I spend most of my time, or what's most important, that is the most important. Looking back with the journey that you've been on that got you to this place, what would you have done differently? 

[00:44:01] MELISSA WIDNER- MW: it's a really hard question to answer because some of the failures or the hardest things are where you learn the most. So you can go back and say, oh, I wish I'd done that differently. But then I thought, oh, I kind of learned a lot from that. But, one thing, so I ran an industrial supply company for five years, before I went to business school. I deferred business school for a year because I thought I had more to do there. And I probably would've, I could've done that for three years and learned as much as I needed to learn in three years. So maybe I've spent less time, especially, that's back in my twenties when, time is super val.

[00:44:34] MELISSA WIDNER- MW: It's really valuable now, maybe even more so, but, so maybe, 

[00:44:37] MELISSA WIDNER- MW: um,

[00:44:37] DAWN ANDREWS - MW: Like been a little bolder or you're gone for it faster. 

[00:44:42] MELISSA WIDNER- MW: Yeah. Yeah. And I travel a lot, but I'd say even travel more. You know, I wish I had exercised more when I was younger and made that more of a hobby and a habit and yeah. Things like that. 

[00:44:54] MELISSA WIDNER- MW: I wish I had stayed out of the sun. That's what I wish I'd, I used to go lay out with a silver platter under my face to get it tanned. That's what I would've done differently. Totally. So worn sunscreen like, yeah, 

I did that one time because you can tell from looking at this skin, me and the sun, in my heart we have a love affair, but in, in, real life, It does not go well. 

[00:45:18] MELISSA WIDNER- MW: Yeah. Well, good. We'll see. And then it works out. So anyway, I mean, that sounds like a pretty vain thing to say, but like, what would I have done differently? 

[00:45:26] DAWN ANDREWS - MW: Truth, Truth and health. 

[00:45:29] MELISSA WIDNER- MW: Yeah. Yeah. Well, one of your questions that you sent in advance, which we haven't really touched on at all, was three people you could have dinner with. Living or dead. That was one of your questions, right? 

[00:45:40] DAWN ANDREWS - MW: yes. 

[00:45:41] MELISSA WIDNER- MW: And, Joan of Arc, that would be really interesting cuz she was pretty fearless. My parents, I wish I could have dinner with my parents now. So my parents both passed away and I have so many questions. 

[00:45:52] DAWN ANDREWS - MW: What would you ask them? 

[00:45:53] MELISSA WIDNER- MW: oh, just all kinds of things, you know, about my life when I was younger and their lives when they were younger and what things were like, and there's all these questions I have. My grandparents lived to be very old. They passed away actually not that long ago. So I got a chance just to drill them on everything I could think of that I'd wanna know, but you know, with your parents you don't necessarily do that. So I'd love to have dinner with them. 

[00:46:14] DAWN ANDREWS - MW: I love it. Totally moved by that share, Melissa. I'm taking a moment with it I'm like, Hmm. I'm reevaluating my life choices right now. So one of the questions that I ask Is, if you imagine yourself standing in Times Square and you're surrounded by all the sparkly billboards, you're totally safe, you will not be picked off by a cab and you get to choose on the biggest sparkliest billboard, a message that you wanna share with female leaders in the world. What would you put on the billboard? 

[00:46:44] MELISSA WIDNER- MW: I would put on, there's something that I have in my office, which is being painted right now, so I'm not there. But it's, living with fear stops us from taking risks. And if you don't go to the edge of the branch, you won't get the best fruit. We all live with fear and people talk about fear of failure but, that's where the magic happens. 

[00:47:02] DAWN ANDREWS - MW: Well, and it sounds like from everything that you've shared with me today, you've been standing on the edge of the branch for most of your career, and I'm so glad that you have been because it's led me to this conversation with you, which I'm very thankful for. Thank you for being with me today and for sharing your wisdom and your time, and thank you for what you're up to with Heads Over Heels and with Lighter Capital, because I feel like there's a pathway for female business owners that didn't have the possibility of existence before and even didn't exist until very recently. And I'm so thankful that you're out there saying yes a hell of a lot more than you're saying No. Thank you. 

[00:47:35] MELISSA WIDNER- MW: Yeah. Yeah thanks for having me on, Dawn This was very enjoyable and you're good at this. You're a good interviewer. 

[00:47:41] DAWN ANDREWS - MW: Oh my goodness. Thank you. Learning as I go, excellent. Well, where can people find out more about Lighter Capital? 

[00:47:48] MELISSA WIDNER- MW: Lighter Capital.com. Really simple. Um, and I please if something you're interested in, feel free to also hit me on LinkedIn. It's just Melissa Widner I love getting inquiries there. very simple.

[00:48:01] DAWN ANDREWS - MW: Excellent. Well, thanks again for being here today. I just, I've enjoyed our conversation and learned so much from all of your sharing. Thank you very much.

[00:48:09] MELISSA WIDNER- MW: Thank you for having me.

[00:48:10] DAWN ANDREWS - MW: Thank you for joining me this week. To view the complete show notes and all the links mentioned in today's episode, visit my good woman.com. And before you go, make sure you follow or subscribe to the podcast so you can receive fresh episodes when they drop. And if you're enjoying my Good Woman, leave us a review on Apple Podcast reviews are one of the major ways that Apple ranks.

[00:48:32] DAWN ANDREWS - MW: So even though it takes only a few seconds, it really does make a difference and helps our show grow. This episode was produced by me and Julissa Ramirez. Thank you again for joining me, Don Andrews in this episode of My Good Woman.