February 15, 2023
Melissa Widner - The Changing Face of Founder Financing

If you’ve ever thought about getting outside capital to fund your business but weren’t sure what your options were or what the process entails, my conversation with Lighter Capital CEO & Heads Over Heels co-founder & chairpe...

If you’ve ever thought about getting outside capital to fund your business but weren’t sure what your options were or what the process entails, my conversation with Lighter Capital CEO & Heads Over Heels  co-founder & chairperson, Melissa Widner, will help answer a lot of those questions. 

In this episode, you’ll learn about the different financing options for founders and how Melissa is contributing to the expansion of opportunities available, especially for female founders. You’ll gain new insights from Melissa’s years of experience, not only as an entrepreneur, but also from her work in angel investing, venture capital, and revenue-based financing. You’ll also hear how she started an Australian non-profit to help women entrepreneurs get more support and access to networks and capital.

Melissa walks us through how she came to work in revenue-based financing and explains what the difference is between that and venture capital. She helps us understand the pros and cons of equity-based financing compared to debt-based financing, situations where one type might be a better fit than the other for a business, and how to know when you should consider seeking outside funding for your business.

Melissa delves into how Lighter Capital supports entrepreneurs, what their financing process is, what a typical financing arrangement might look like, and how revenue-based financing can be a pivotal first step before seeking venture capital. She also shares examples of the many successes her Lighter Capital clients have achieved.

Finally, Melissa tells us the observation she made that inspired her to form her Australian non-profit Heads Over Heels to help female entrepreneurs, what she says is the reality of the business world compared to what we hear, and how you can apply for financing with Lighter Capital.

Skip to topic:
4:19 - The difference between venture-based capital and revenue-based financing business models
7:27 - How revenue-based financing works
9:56 - How Lighter Capital helps entrepreneurs
11:55 - Recognizing an opportunity and launching a business while in college
13:56 - Being acquired by a larger business
19:12 - When you should take equity over debt financing
21:33 - The range of funding Lighter Capital provides its customers
24:47 - How to know when you should seek revenue-based funding for your business
27:28 - How to know when you should seek venture capital funding for your business
28:36 - Using using revenue-based financing as a starting point before going for venture capital
30:56 - Starting her non-profit Heads Over Heels to support female entrepreneurs running high-growth potential companies
36:03 - What Melissa says is real in the business world vs. what we hear
40:41 - Where to go if you’re interested in applying for funding with Lighter Capital

Find Melissa at:
LinkedIn: https://www.linkedin.com/in/melissawidner/
Apply for Lighter Capital funding at: https://lightercapital.com/apply
Free startup valuation calculator: https://www.lightercapital.com/valuation-calculator

Visit Stephanie at: https://stephaniehayes.biz/

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Welcome to the Real People Real Business Show. My name is Stephanie Hayes, and I'm a business strategist who helps mature entrepreneurs design their wealthy exits. Whether that means building an asset-based business model for an eventual sale, or simply taking yourself out of your business while enjoying its continued growth. I love to speak with like-minded entrepreneurs to share their real stories and the gritty details on how they've navigated their own way through. On this show, you won't hear about the glamorized entrepreneurship journeys that you see online, and you won't be told how to make six figures in six weeks. Instead, you can expect to hear real, vulnerable and inspiring stories you can relate to that have helped create the foundation for each of our guests businesses today. I'm so excited to welcome Melissa Widner. Melissa is the CEO of Lighter Capital, the pioneer and leader in revenue-based financing for tech startups and scale-ups. Melissa has a deep understanding of both the entrepreneur's journey and the role of funding partner can provide as CEO. Melissa led two companies to successful exits returning over a 10 times return to her investors. She was the founder and CEO of Silicon Valley-based 7 Software, and the managing director of N A B Ventures, the VC arm of the National Australia Bank, where she led the bank's investments into high growth fintechs, including Lido Capital. Melissa's also the co-founder and chairperson of Sydney-based Head Over Heels, an organization that supports women entrepreneurs running companies with high growth potential. Welcome to the show, Melissa, and thanks so much for taking the time to share your story. Thanks so much for having me, Stephanie. It's great to be here. So we have lots to talk about. I would really love to just start from the beginning with you and tell me a little bit about the journey. So you, you've, you've led a couple of startups, at least a couple of startups you are in, you're an investor, you are leading revenue-based financing. Tell me everything. How did you get here? Yeah, well, so I, um, am very entrepreneurial. I was like an entrepreneurial kid, um, had businesses when I was a kid and in college, had a hair accessories business. So I was always quite entrepreneurial. Um, I, uh, ran a company right outta college that was a turnaround company. and um, then went to business school, did a summer internship at Goldman Sachs and sort of learned about like technology companies and more about financing. And then started an enterprise software company, um, in my second year at business school, um, that ended up having a, a successful acquisition where it was a company called Seven Software, and we were acquired by Concur. I then went into, had a nice exit, so went into the angel investing and then became a venture capitalist with a fund in the us and, um, moved to Australia with an Australian husband and got quite involved in the Australian ecosystem, that whole startup ecosystem here, which has grown tremendously over the last decade. Um, most recently I was the managing partner of NAB National Australia Bank Ventures. and at National Australia Bank Ventures, we invested in Seattle-based Lighter Capital, um, which is the pioneer, as you said, in, um, and leader in revenue-based financing for B2B SaaS companies. So I got involved in that company at the board level, and then in 2020 I, um, took the CEO role. So I've been running the company for a little over two years now. And I, I, you also mentioned, I, I'm the, um, Co-founder and Chair of Heads Over Heels, which is a Sydney based organization, or Australia based organization that helps female entrepreneurs. And I, the way I got here to where I am now is I just love spending time with the most fascinating people on the planet, which are startup entrepreneurs. Um, they are a different breed. Um, they are the most interesting people. Um, and, you know, being able to. Work with them and help them is just a privilege. So that is how I ended up here at Lighter Capital. At Lighter Capital. We can talk, um, about what we do, but we've provided over a thousand rounds of financing to over 500 companies, and most of them, you know, B2B startups, B2B companies for the purp, for the, uh, To help our listeners understand more about the model, um, maybe you could tell us a little bit about how revenue-based financing works and how it's a bit different than, you know, ver more typical kind of, um, venture based financing. Yeah, so I. venture capital is what everybody hears about and everybody reads about, and that's what's celebrated, you know, big rounds raised and unicorns being formed. But it's a tiny, tiny percentage of not just companies out there, but even technology companies out there that, that go down that venture path, that want to go down that venture path and give away equity and control or that are even, um, eligible to go down that venture path because venture capitalists are, um, , you know, they're, they're unicorn hunters. They're looking for companies that can become large businesses. They're okay with a large loss rate, meaning there, it's fine if eight or nine of 10 of their companies fail as long as they get that one hit. That does really well. I mean, that, that's just the business model. So, but there's a lot of companies out there that, uh, that aren't on, on that path necessarily. Their TAM, their Total Addressable Market isn't big enough where they would ever become a unicorn, but they're still, you know, good companies. Run by really good people that need growth capital. So that's where lighter comes in. I'm backing up a little as a venture capitalist, I spent, uh, the better part of two decades as a venture capitalist and, um, I, I say, you know, venture capital. Being a venture capitalist is a great job because you also get to spend time with the most fascinating people on the planet, start up entrepreneurs, but you're in the rejection business and you're saying no probably 99 times for every time you say yes. And you know, that's hard. You're constantly, you know, not telling people their babies ugly, but constantly saying no. And I remember, I, I pitched a lot of VCs when I was an entrepreneur. You remember every pitch you give, um, and you know, every. , you know, rejection's never easy to take. Even knowing that, you know, there's a 99% chance the answer's going to be no, it, it's never easy. But, um, on the, on the lighter capital side for our company, we fund every company that meets our investment criteria. And our investment criteria is, um, transparent, straightforward, there. You know, very little subjective measurement that goes into it. It's data driven. We look at a company's, um, we look at a company's numbers and we can tell whether they will be a fit for our financing or not, and if they will be a fit at what price. And we're able to, you know, let potential applicants know, you know, within a day or two, um, if they are a fit, and potentially get money out to them in a week or two. It's a much simpler process than going through a venture venture round. Right. And, and for those who aren't as familiar with it, that's, it's also different than, you know, going and, and leveraging yourself and getting a loan or, or some, you know, type of leveraged equity to, uh, get you through. Right. This is where I'm assuming lighter has an option to. So no lighter is a loan. So basically it's a rev revenue based financing. Yeah. Is we provide, um, a loan and the, the payback that the, the company pays back as a percentage of their revenue until the loan is paid off. So the way it works, depending on the duration of the loan, but let's just say it's a really short term loan. Um, you might borrow a dollar and in a year you'd pay back a dollar 10. And you'd pay back monthly payments and pellets paid back. Um, if you're borrowing money for longer, say it's, um, three years, you might borrow a dollar and over three years pay back. Um, it, it depends on the risk, but pay back, call it a dollar 35, but it's a fixed amount. So you would know that, you know, I, I've taken this dollar to build my business and I'm going to pay back a dollar 35. And the payback is a percentage of cash collected revenue, a small percentage every month, and it's usually the percentage is also set, but it's usually under 10%. Let's say it's, you know, 6% of your cash collected revenue every month until that dollar 35 is paid back. And what's great about that for both lighter capital and for the entrepreneur is, or, and for the business, is that our, our interests are really aligned because if the company has a month where there are low cash collections, they don't have an onerous debt burden to service. Um, if a company's revenues really decline, they, you know, they, again, they don't have this. Um, debt payment to make, they've got three years to pay it back. And if there's a lot of variability in their cash collections in those three years, you know, it's, it doesn't put, yeah. You know, the company's able to service the loan, which makes things so much more accessible. You know, having been through the process and numerous times. Yeah. It's, you know, it's, it's, there's a lot of risk and there's a lot of anxiety. There's a lot of stress in going out for capital, and I think this model. Revenue-based financing. The model in general is, is, uh, making it a lot easier for the founders who don't necessarily need that criteria to, you know, get some capital and get some injection. Now, do, do you ever look at any of these founders and, and, uh, look at them as potential acquisition targets? Are you in still involved in the investment? No, no, no. So we are, we provide funding and then we provide help. So, okay. We don't take any control. We don't take any equity. We don't take warrants. We don't take any board seats, but, um, we provide capital and then we provide help. So some companies use help from us a lot. Some just take the capital and go on their way. But you know, we have, uh, we have a big community among our entrepreneurs. We put on a C E O summit. We have CEO e groups so they can really learn from each other. And we also have perks discounts that are offered to our companies. Like one of the biggest one that gets taken up is a $25,000, um, AWS credit. A lot of our companies, um, are AWS customers, so, It's, you know, uh, one of the biggest areas where we provide help is when a company does want to go on and do a venture financing round. So, you know, like I said, I was a venture capitalist for a long time. I'm very well connected in both the Australian ecosystem and then also in the US we have Silicon Valley Bank who is a, um, Investor in lighter capital. So when a company does want to go on and do a venture capital round, we'll help them with their deck often and we help them with warm introductions, which is really important. You know, we can't get them funded, but we can at least get them warm introductions into venture capitalists when and if they do want to go down that path. Yeah. Can we go back to the beginning and um, I just wanna talk to you a little bit about you. You started up seven software in your second year. Mm. And so you recognized the opportunity and can you tell us a little bit more about that business and how that grew? And, um, you know, I, I'm really curious around the story because you were quite young and a lot of times when people are right in that stage, like, I remember being, you know, second year and really not knowing what my options were and really being unaware. What I could do, and I wish I knew what I know now back then, but how did that sort of, how did that evolve for you? Well, um, before I went to business school, I had run, um, a manufacturing company and that, um, had us, I did that for five years. It was a turnaround. It was 40 year old company. Um, had a, a great return for the owner, the investor who got a 15 x. We sold the company on his investment. . Um, so I, I didn't have experience running a business before and running a sales team and a p and l, but, um, when I, I went to school in, in Silicon Valley, I went to business school at Stanford and I, you know, learned about technology companies. And I spent the summer working, um, at Goldman Sachs in New York and saw, you know, technology company evaluations. This was when, um, you know, when, when, well, it's been a. Bull market for a long time, but this is kind of at the beginning of things really heating up and, um, had this opportunity, um, with somebody who was my co-founder, um, who was my boyfriend at the time, but he was at Microsoft and he's my husband now by the way. But he was at Microsoft, um, and he had created this product there for internal. Called MS Market that was to automate procurement and the company saved Microsoft. Um, they would tout it. They would tout it as saving Microsoft 35 million, um, internally by automating procurement, by taking a lot of the manual, uh, labor out of just, you know, processing a purchase order. So, um, it was obvious that there was a demand for this. Microsoft was not an enterprise software company at that time. In terms, You know, they were mostly focused on, um, consumer applications. So they had no business, they had no interest in productizing this. So the, the opportunity was pretty obvious that, you know, there was a, you know, there was a, a demand for this. So we started that company. I was the CEO um, my co-founder was a cto, got some, you know, bootstrapped it. Got some, um, early customers that helped fund the early days. Got some early angel. Money in. And um, then before we did a venture round, we were acquired. And you said you were con, you were acquired by Concur. Concur, yeah. Yeah. And so how did that go? So you were, you, did you stick around for a little while? Was there a transition out? Yeah. Yeah. It's interesting. I talked a lot. This is a conversation. I have a, with a lot of our, um, lighter capital portfolio companies cuz a lot of them, um, do go on to be acquire. And what I've noticed is that, um, over the last decade, especially these, um, the time required for the founder to stay with the acquiring company seems to have increased . Yes. So it's, it's now seems to be three years is what everybody's asking. Um, and I did, I had to stay with the company I think for 11 months per my, um, agreement. And the, my co-founder had to stay for two years cuz they were more interested in, you know, the technologist. But yeah, who's, I would say M Concur is a great company. It was just a painful, it's painful 11 months if you're, um, if you're used to, you know, doing things and making things happen and yeah. And I, I see that a lot of times when companies get acquired, you know, you just kind of have to go sit there with the big acquisition company and you. Not necess been through it yet necessarily having an impact, but you know, other times companies are acquired and the acquirer leaves the company alone and lets them, lets them run with it. I think that those, those tend to work out, you know, better. For the short term at least. Mm-hmm. I know we used to, we used to run a consulting, um, company in the integration space, and so we would do big enterprise integration and there's a, you know, there's a lot of need for that kind of work with mergers and acquisitions. Yeah. Because, you know, you've got this C F O that acquires a cu as part of the acquisition and is all of a sudden the minute that that, that happens, the, the new C F O is responsible for, you know, all of the financial reporting and all of the, the numbers for. Whole organization. So the sooner you can get the, the data and the systems integrated the better. And so we were always kind of on the, the edge of that, that circumstance, I guess. And, and, um, have seen lots of , lots of those kind of play out. And, and back then it was always like the year, right? The year that the old founder hangs around and then kind of moves on and Right. And that sort of thing. Yeah. So you, you stuck around for 11 months and then what happened? Um, then I started doing some angel investing. Yeah. And which was fun. And it was great getting up back there in the preneur community, entrepreneurial community. And I started, um, I'm just trying to think of the timing. How much longer it was. I think it wasn't probably within seven or eight months. I ended up, I didn't think I would get a job right away, or I didn't, that wasn't the plan to go back and, and work right away. I had a, um, brand new baby at that time. I had a, at that time he was, Probably one years old. I was having a baby at the time I was selling my company. So, um, but I ended up working, I ended up going to a venture capital firm in Seattle where I, where I worked for quite a long time, for over a decade. And then y you know, you were. Sometimes somehow back to Australia. Yeah, yeah. in Australia. Yeah, exactly. Yeah. My husband's Australian. Yeah. So I, I say I had a verbal prenuptial agreement to live in Australia someday, so I, I don't know that I'd be unhappy about that. No, no, it's not. I'm not complaining. I sp I spent about half the time in the us I've been spending more of the time in the last two years in the US than in Australia. But it's, it is not a bad place to. No, no, I, I would imagine not. I think that there's probably a lot of similarities to kind of where we were or where we are in the world and, you know, maybe Sydney and, and, uh, the water. Yeah, the water. Yeah. There's even like a, isn't there Canada Bay? There's Canada Bay in, in Sydney. Just an area. Anyway, so you've, so you've had your, your, you know, you've had your feet in both the startup world and the, the venture world, and it feels like you're kind of in a little bit of both right now, at least with, from the financing side. So the one thing that I see with a lot of startups and like you, I've been in the startup world for a very long time and been an entrepreneur and mentor and you know, building accelerators and that sort of thing, incubators. But I think that a lot of small founders don't know that funding is accessible to them and they think they have to go through a huge venture capital exercise. And I think a lot of, you know, I think what you're providing to founders is. is a lifeline that they didn't know that they had because if they can't go for money, Then, or they, they don't wanna go for money or they're scared of going for money because it's such a big undertaking and you know, there's so many rejections. It's a hard, it's a hard thing to endure. Very time consuming. Yeah. Very. Yeah. And so how are you finding that there are more of these kind of smaller founders that are realizing they can get that kind of support now and that they can move through to, you know, growth without having to take on that exercise? Yeah, look. All things equal. It's always makes more sense to take equity, to take debt over equity in, unless that equity is coming with so much help. It's worth, you know, giving away, you know, the control you might giving away, be giving their, or the equity that you're giving away in your company that upside. So equity is really expensive for a growing company for sure. But you're getting a commensurate amount of. for that, you know, for giving away that equity. It could be, you know, absolutely worth it. Um, so you know, if you're getting, you know, just an investor and that's going to change your business, um, that doesn't happen often, but you know, that can happen and. And also you should take equity over debt if the debt is going to be onerous to service and potentially put the company at risk. So, you know, you don't wanna take debt on that, you know, if you have a hiccup, you might not be able to service it and it could, you know, create, if there's a bunch of financial covenants or, I mean, a typical bank debt has, um, pretty strict financial covenants that make reporting requirements can, can make those, can be quite onerous for the company. Um, so you. This type of funding is, is typically going to be preferable over equity now. The, the, the limitation with this type of funding is lighter capital will provide up to four times MRR for, uh, smaller companies and up to six times MRR for larger companies. Cuz it has to be a, an amount that, you know, we can get paid back within very small percentage of revenue over three years. So take a company that's doing a hundred thousand a month in revenue, um, we can provide them up to $400,000. You know, if you're a company doing a hundred thousand a month in revenue and you need 10 million to grow to your next. You know, to hit your next milestone, then, then you're going to have to go down the equity route. Um, that's a really different, that's a really different situation for sure. Right? Yeah, yeah, yeah. I mean, most of our customers, so, and, and in terms of the size, lighter, lighter provides capital funding rounds for anywhere from 50,000 as small as 50,000 up to $4 million. So it's, it's quite a broad range. The average. Customer when they take their first, uh, financing round from us, it's around $450,000. Um, but you know, we have several that take under a hundred thousand. But, uh, there's, we, we sort of, with over a thousand rounds of capital deployed, we, we've seen everything. But I would say the most common scenario is a company. Has been bootstrapped or maybe had a little bit of angel financing and, and now they've kind of figured out what they're doing and who they're selling, you know, what they're selling and who they're selling it to. And they realize if they bring on another salesperson or create another product, um, you know, they can actually move the needle so they're ready to invest there and wanna take in some capital to grow. So that's a very common, you know, a common use of our funds. We also have companies that are further along where there's one founder wanting to buy out another. You know, and they don't wanna go down in the venture route to get funding for that. They don't wanna give up control, but they need to get some capital to buy out, either early investors or, um, a co-founder. And what we're seeing today, a lot of, um, in this market where, you know, um, valuations have declined a lot in the last year is we're seeing a lot of already venture backed companies who are doing well. Coming to us for funding because they don't want to go out there again for another round one. Spend a lot of time, potentially do a down round or a flat round because you know, a year ago you were able to raise a lot higher evaluation than you can today. Yeah. Yeah. I mean, I grew up in the.com. I'm from the technology sector and I grew up in the.com era, . I mean, it was a different world, right? It a different world, right? . Yeah. And there was, I mean, people were throwing money at everything and we, we were working, uh, incubating little companies and so we were always at the mercy of. you know, whatever Venture capitalist was giving us money and half the time they just wanted to give us money so they could write it off and they, they wanted us to fail. Right. And so they like it. It gets really tricky right into the, and I actually own a software company right now that is right at that inflection point. Yeah. Where I know that we can't, we can't grow unless we have some more money. And you know, we're all. In the range of our fifties, and we , you know, we, uh, we're trying to make a decision and so we thought, oh gosh, we should sell the business, or we should, but you know, we know we can't go any further. So you reached that inflection point. Where I think like a little bit of an of revenue-based financing would work well for us as an option that just maybe not have, would've been available. Like we've been in business for 12 years and 12 years ago, I don't know that that would've been available to us. So it's, it's becoming really interesting to, to sort of get into this world because we were entirely bootstrapped great, you know, profitable business and you know, big sort of solid clients, but, You know, what do we do? So like, I think there's a, there's a question there around when, when as a business, do you know that it's time to look for some money? Well, you shouldn't. Take money if you don't know how. Well, if, if you don't have a very specific use for it, because it's, it, I mean, equity is the most expensive money, but, you know, debt is also expensive. You know, if you're borrowing a dollar and paying a dollar 10 over a year, or a dollar 35 over three years, you know, that's, you know, you have to have a, just a justification for spending that 35 cents for, um, so. In terms of how, um, it sounds like you might be looking at it if we took your company as an example. Are you looking at a founder buyout or are you thinking that there's, you know, some other areas that you'd want to invest in? Well, I think it depends. I think it depends what the terms would be. I think it would depend on, you know, what the, what the options are that are before us. But, you know, ve um, revenue-based financing is just kind of come across our desk as an option and, and it's one to explore. Whereas before we're really looking at do we just sell the business? Yeah. So I think that there's like, there's that pressure point that most of these businesses are feeling when they realize they start need to start going for money. I think a lot of startups kind of. You know, you, you start up a business that's in the early days and you're like, oh, the things I'm gonna go do these pitches, I'm gonna be on dragons stand and, and Like, you just don't want to if you don't have to, because I've seen it so many times and it's hard. Right? Yeah. But then I think that a lot of founders are still like, Founders don't necessarily have a business education. And so I think a lot of founders are still kind of like, well, maybe I should ask for money and I don't really know why yet. And, and I think you, I think it's smart to sort of stay. operating in the business until, you know, like I know we've been in business for 12 years. I know now we're at that point because there's pressure. I try to bring in new business. We probably can't deliver on it in the time that we need to because our resources are constrained. So that, like those kinds of things. Without a doubt. I know this 10 years ago, it would've just been sort of a. Maybe we should ask some money. I don't know why, but maybe we should ask for some money. . Yeah, so, well, I mean, it sounds like if, if you're saying, look, we, we know how we could deploy money and generate more revenue as a result, but you know, if we have the money now, we would do it today and generate the rev revenue faster then that, that's the perfect use of, you know, not just our money, but any type type of in. Yeah. And when would you advise somebody to actually go for, for venture? Well, so if you are, um, trying to build a company, you know, if you are going down that unicorn path, and also if you're going down a path where you are going to need to raise a lot of money to get there, which, you know, there aren't a lot of companies, there are big biotech startups, you know, that sort of thing. Not even, even most technology companies. There aren't a lot of companies, you know, worth over a billion dollars. That, um, there are some examples, but there aren't a lot that. Raise a lot of money to get there. So if you know you, you know, if it's a company where, you know, if you're trying to dominate a space and you are going to, you know, just have to go for rope and raise a lot of money, then, then the venture path is, is probably the only one, you know, with some very rare exceptions. Yeah. So, um, you know, Uh, now there are times to get on that path, and we have, um, so many examples in our portfolio of, um, current and former customers who used our money to get to a point where, you know, they could really pick their venture investors because they had a lot, they had a lot of track, they had a lot of traction before they were going out. We have just sort of example after example, but, um, one that comes to mind is a company out of. New York called Flip. They used to be called Red Route. Um, they're great company that does, uh, helps, helps semi-automate customer service. Not all of it, but they automate parts of it. So, um, they can really help companies scale their customer service. Um, Uh, capabilities without putting on a lot more bodies. But they took money from us when they had a million dollars in revenue and they did a couple rounds of financing, got up to 3 million in revenue with our money, so without any dilution. Went from a million in annual revenue to 3 million and then did a venture round. So, um, same exact story with Style Arcade run by a great entrepreneur, um, McKayla Wessels out of Australia. She took money from us when she had just a million in revenue and went and did a venture round, did I think probably three rounds from us and then did a venture round when she had 4 million in revenue. So if you think about. You know, I don't know what her valuation was at the venture round or what it would've been, but if she had raised it, say when she had a million in revenue in venture capital, uh, if she had raised venture capital when she had only a million in revenue, and let's say, you know, she, she could get a valuation of 10 x, so she would've, um, had a valuation of 10 million when she was raising. But instead she went and raised when she had 4 million. Revenue, and if you assume that same 10 x valuation she's raising now at a 40 million valuation. So she was able to get there without dilution. So able to, instead of raising at 10 million, raise at a 40 million valuation. And again, I don't know what, I'm just putting a, a multiple on her revenues. I don't know what the valuation is, but you know, to the extent that you can grow the, the more you can grow without dilution before you have to take that venture around. If you do have to take that venture around, the better the outcome's going to. financially for the entrepreneur and, and for the early angel investors, if there are any, when there is an eventual exit. Yeah, yeah. No, I love that. Can we, uh, can we talk about Heads Over Heels? Yeah. Love to talk about heads over heels. Tell me more. So Heads Over Heels was founded, um, in 2010 by um, three. My co-founders, myself in Australia. I was fairly new to Australia at the time. And, um, we just got together and we weren't seeing the anything really moving in terms of like more women getting funded, more women growing companies. Something really needs to be done. And this was before Lean in. This was kind of. It became, you know, a topic that was much more widely discussed and sort of in, in terms of like, you know, there just aren't a lot of women out there growing big companies and getting funding. Um, thankfully, you know, that that has now been, um, It's a lot more widely discussed and there's support around it, but in 2010, there wasn't a lot happening there. So we started, um, heads over heels with the idea that we would support women entrepreneurs running companies with really high growth potential. Who, and the way we would support them would be by getting them connected to senior business leaders who, whose connections could help you. Move the needle for these companies. And, and it goes back to, I think about when I, um, started seven software. Um, I can trace a lot of good things that happened to the company and even at, to the eventual exit that we had. And it had to do with, um, you know, being, uh, ha having a, a specific introduction or connection made you. At the right time. So the thesis behind Heads Over Heels is that, um, women are good networkers, but in general they don't. They, they don't have the same. Access to the types of connections you need to really move a business forward that their male counterparts do. And again, that's in general not, that's not the case with every female, but you think about those things you need to move your business forward. A lot of times it's access to financing. Yep. And having those networks for access to financing, access to strategic partners. So what Heads Over Heels does is it's, um, it's a selective process to become a Heads over heels portfolio. Oh, first of all, it's it not for profit. There's no fee. Paid by the entrepreneur. And this is funded by great sponsors. Um, and if you're selected to become a Heads Over Heels portfolio company, you can present to our group of what we call connectors. And these are very senior business leaders who are just willing to open up their networks. So you might pitch and say, this is what my company does and this is what I'm looking for. I am looking for introductions to banks. Um, cause we sell to banks and you know, we'll have, you know, senior, uh, people in. You know, as our connectors and they'll say, I'll make the introduction. So they can't do the sale. But a warm introduction is so hard to get and it could be something you never get, and it could be game changing. So after we've now done this for 12 years and there's just story after story and evidence or, um, example after example of how, you know, this one introduction made a big difference and potentially the difference in a company's company's life. So we're really, what, what Heads Over Heels is about is trying to give women equal access to those network. And, and our, our connectors are men too. And then they're, so it's not just women. The CEOs are just women, but our connectors are men and women. Right. Yeah. I love that. And is that just based in Australia? Well, yes it is, but we, um, are we. We found out in, um, COVID that our format works really well over Zoom too. We, everything was in person before, but Zoom works really well. So we actually, um, had an event that was focused on the North American market in last March and we're doing another witness March focused on the North American market. So I will definitely, he, yes, I would love to attend. Yeah. Yeah, yeah. It'll Awesome. Be great. And we're, and it will be. For some of our CEOs here in Australia. Yeah. But we're to get them in front of, you know, people that have deeper connections in the North American market. So specifically for companies that are looking to go to the US Yeah. Or Canada. Amazing. I mean, and that, that is truly what is needed. I know there are a lot of. , um, memberships you can become part of and pay for and that sort of thing. And I have been in those and I think there are very few and far between are the ones that are highly effective. So I think that, you know, what we, what we need is, is exactly what you've talked about. I know that any of the businesses I've started in the past have only grown through collaborations and partnerships and, um, being able to align our work. Those with that of other partners who are, you know, who understand it and who can introduce us and, and bring us forward. So I love that the, that's the work that you're doing. Um, before we finish up, there's one question, and I always ask all of my guests, and you've been a business owner. I mean, I think we could probably talk for three more hours, but there's a, you've been a business owner, you have been a venture capitalist, you have been, you know, you are leading this, you are leading this nonprofit. You have been all over the place. , what's the difference between, you know, what we hear out there in the online business world or in the business world in general, and what's actually real about running a business? Where do you start, right, ? Yeah. Where do you start? Um, I mean, it's, it is absolutely exhilarating. You know, the highs are very high, the lows are very low. Um, I, I think I'll, I'll, I'll maybe change your question a little bit if that's okay. Yeah, sure. So one of the things that we believe about, or, or generally believe about entrepreneurs is that they're big risk takers. Um, and that's actually. The case, they might be bigger risk takers than the average population, you know, but big risk takers would be like, I don't know, derivatives, traders, or, uh, you know mm-hmm. Those are big risk takers. I mean, entrepreneurs in, in general are, um, you know, taking more calculated risks, but, uh, what entrepreneurs have in common, um, is that they have more, or what they have that to a much greater degree than the general population is they, um, High confidence in themselves. Typically to go out and start a business, you have to, cuz you're going out and, and doing something that, um, is, you know, the odds are you're not going to succeed. But they have a, they're much more comfortable working in a world of ambiguity than the general population. Yes. Because you, you have to be, you don't, you have to make decisions without having all the data and you're never going to have all the data and you just have to. Comfortable living in that world of ambiguity and, and have a high confidence that you're going to be able to navigate it. So I think that, um, you know, that's something that probably doesn't get talked about very often. That's such an amazing answer because you're absolutely right. Right. I, I have worked with a lot of entrepreneurs that are, I wouldn't say are overconfident, but, and, and actually do get crippled by some of the lack of competence. They still do it, but that, that tolerance for ambiguity is absolutely what we all possess. And, um, the longer that you need things to be certain, The slower you're gonna go. Yeah. . Yeah. Right, right, right. And yeah. And, and the other thing is a, a higher tolerance for failure or a lower fear of failure. Mm-hmm. I wouldn't say no. Fear of failure. Mm-hmm. , I think you'd have to be inhuman. I mean, yeah. Failure's the worst thing and it's. Every time I embark on something new, that's my biggest fear. Even if it's just going to be like a reputational failure, you know, we all talk about like how, you know, in the value of failure is celebrated. I mean, not really, you know, nobody wants to fail. Success is much more celebrated. But you, but I think that entrepreneurs do have a higher to, yeah, obviously they have a higher tolerance for, you know, um, potentially failing cuz you'd have. I do a lot of work around innovation strategy and innovation management and you know, one of the, the sort of theatrical claims about innovation is that you always wanna celebrate failure. And I think that's just goofy. I think what we need to do, um, Is just changed the way, changed what we define as failure. Like who ca like it's, it's just good information, right? Yeah. So you tested something, you tried something, it didn't get the result that you wanted. Well now you have more information, right? So I always try to re, I'm one of those people that just never experienced that, like the fear of failure or the fear of, um, Of being judged. I just like, I don't know what, maybe I should care more. You never experienced it? No, not, no. I mean, not in the way that it's, it's like crippling. I know it's a possibility. Mm-hmm. , and I don't, I don't want it and I don't like it. Yeah. But I've never, it's never held me back. Right. And I think that that's, that's one of those entrepreneurial tendencies is like when you, you can stop making it about, And I think that's the one problem a lot of entrepreneurs face is, is it they do, they personalize it a lot, right? Yeah. So it's not really about you, it's just, you know, there were other decisions to make and you can still make them, and you, this is just all a long continuum of more information, right? . So I think, I think I love, like, I love your answer because it's, um, you know, it's very, very true and that ambiguity is, is needing to be certain and is going to, is gonna absolutely hold you back. Love it. Awesome. So we're coming up on time. We're gonna wrap it up, but can you tell, um, our audience where they can find you or connect with you? Yeah, so, um, lighter capital.com spelled exactly L i g H t e r capital.com. Um, if you are interested in finding out, if you might qualify for our funding it, you can go lighter capital.com/apply. Um, it takes 45 seconds just to fill out a little bit of information and that will say, look, it looks like you might be. Might qualify for our funding. We also launched something recently. Um, and Stephanie, we can put this on your website for people to find it, but it's our evaluation calculator that, um, it's a question we get asked probably, um, almost more often than any other question is what's the valuation? My company, you know, these are entrepreneurs, a lot of 'em that aren't out there getting their valuation validated by VCs. Um, but would like to know. So we put valuation calculator up. Love it. Oh, great. We'll put all of those links in the show notes. And I think that this is an incredibly valuable resource. I know the people that I'm working with are looking to create an exit down the road. They're not necessarily at that place right this moment where they're ready to exit, but they wanna create a business model that Yeah. Makes their business more valuable so that an exit in the future could be. Viable for them. So I think becoming educated and having access to tools like you have provided I think are gonna be incredibly. Awesome. Well, thank you so much. Um, we're gonna wrap it up. I'm so happy that we had the opportunity to chat with Melissa today to hear more about how her businesses came to be, her experiences along the way and what the future entails for her. And thank you for tuning into this episode of The Real People Real Business Show, where we get the real entrepreneurial stories and journeys that you can relate to. The show notes, resources, and links from this episode are available on my website and social media platforms. If you've enjoyed today's content, I'd love for you to give us a review on whatever platform you're on to help us share these genuine stories with an even bigger audience. Until next time, keep building. Keep dreaming and keep being real.

Melissa WidnerProfile Photo

Melissa Widner


Melissa Widner is the CEO of Lighter Capital, the pioneer and leader in revenue based financing for tech start ups and scales ups. Lighter Capital is backed by National Australia Bank, Silicon Valley Bank and Voyager Capital. Melissa has a deep understanding of both the entrepreneur’s journey and the role a funding partner can provide. AS CEO, Melissa led two companies to successful exits returning over a 10x return to her investors. She was the founder and CEO of Silicon Valley based 7Software (acquired by CNQR, acquired by SAP). She was the Managing Director of NAB Ventures, the VC arm of the National Australia Bank where she led the bank’s investments into high growth fintechs, including Lighter Capital.
Melissa is also the co-founder and Chairperson of Sydney based Heads Over Heels, an organization that supports women entrepreneurs running companies with high growth potential.
Melissa served as a lecturer at the University of Washington's Graduate School of Business where she taught courses on venture capital and entrepreneurship. She was previously on the board of the AIC (AVCAL) and has served on the boards of several venture backed technology companies in both the US and Australia.
Melissa holds a Masters degree from Stanford University and a Bachelors degree from the University of Washington.