Q&A: Candace Klein on the success of Bad Girl Ventures

What are the main challenges that women face when trying to start businesses?

Women represent about 50 percent of all privately held companies in the U.S. but have access to only 5 percent of traditional capital. When I first started studying microfinance in 2008 I reached out to my friends who were bankers and friends who were venture capitalists and said "Why are you not funding women?" The VCs said, "either women don't come forward, or, if they do, their business plans are half baked or their growth strategies aren't aggressive enough." I went to my friends who were bankers and I said "are those the same reasons you don't fund them?" And they said "yes, generally, but we also have underwriting criteria that make it slightly more difficult for women to receive funding. First, we require collateral which in many instances is real estate, and more often than not women are not the owners of real estate." The second piece is that many banks require five years of continuous operating experience in the field in which the business is applying for the loan. More often than not, women start businesses tied to our passion rather than to our professional experience.

What was the catalyst for Bad Girl Ventures?

I was practicing corporate law in 2008 and all of my clients were women-owned businesses. When I was laid off, all of my clients came with me. And they said "Candace, I've maxed out my own personal credit cards, I've taken a home equity line out of my house, the banks aren't running to my business, I'm going to have to shut my doors." At first I just wanted to find a way to get money into the hands of my legal clients. So I became obsessed with micro lending and alternative forms of lending. But what I found was all of the institutions I was looking into were doing things just a little bit wrong for women owned businesses. If I were just to give these women a loan for $15,000 they'd fail for a couple of reasons. They were commingling funds, they were structurally unsound, they weren't legally structured correctly for the types of businesses that they had. They were signing really bad deals. The women that I worked with thought that finding financing was the biggest challenge for them, when in reality they really needed training and education.

Describe how Bad Girl Ventures works and what makes it unique.

Bad Girl Ventures is a highly localized, microfinance organization focused on women-owned startups. And we provide training, education and managed resources to women. We provide $25,000, very low-interest loans. But to be considered, women need to apply and be chosen as a finalist. Of the 10 finalists (in each class) only one receives the Bad Girl Ventures loan. However, our goal is to find financing for every one of our finalists. To be eligible for financing, those finalists have to complete an eight-week curriculum which includes classes like understanding your personal credit score and the impact it has on your business, drafting the business plan, understanding your market and how to market to it, legal structuring, pricing your product or service, and accounting from startup to cash flow. It's a three hour class once a week -- two hours of faculty-led class, followed by one hour of intensive one-on-one coaching with experts in the field of whatever the topic is for that day. They actually have to turn in a business plan, a marketing plan, an operating budget, financial statements, and they have to complete an SBA loan application even if they don't submit it to a bank. The goal is that by the time they graduate from our program they have everything they need to be eligible for traditional financing.

You also make training available for women who might not necessarily make it as one of the finalists, right?

Essentially we have 30 finalists in a city per year, and there are three classes, and we're actually up to 50 students in the class. Our average student population is about 57. But of those 57 students, about 15 of them are men. Our classes are open to men and women, young old, whomever, anyone who's interested in learning the educational piece, even if they aren't interested in the financial piece.

So you have some bad boys, too.

Yes, exactly. And we welcome them.

How many classes have you had now?

We've had three classes in Cincinnati and we've kicked off a pilot program called BGV College Edition at Miami University in Oxford. That program is actually being led by students. And then we'll be starting our class in Cleveland on Oct. 12.

Is Columbus still on the drawing board?

We just hired a Columbus "Candace." Her name is Michelle Galligan and she's a successful entrepreneur herself and now becomes the president of BGV Columbus. So she's doing the fundraising right now and our goal is to launch in Columbus by the end of this year.

How much funding have you raised so far?

As a company we've raised about $200,000, but we have now found financing for 18 companies with $310,000. So we've raised $200,000 and leveraged probably another $200,000 through our partners, who are banks and other micro lenders. We have financed $75,000 of that $310,000, but the remaining has been financed by our partners.

I saw somewhere that somebody invested in you when you were younger.

I was the first to go to college in my whole family. When I graduated from undergrad I really wanted to go to law school, and I had been accepted to Boston University and the University of San Diego. I chose San Diego for the weather. But in April of 2003 I was diagnosed with ovarian cancer. And so I had to stay home and go through surgery and treatment and move back in with my parents. And I had no money because all my money went toward my medical bills. At the time, my first job was at the Chamber of Commerce. And I went to my boss and said "I really want to go to law school," and he said "we don't offer tuition reimbursement." But he introduced me to the president of Northern Kentucky University, Jim Votruba, who introduced me to a woman on the (NKU) Board of Regents, Alice Sparks.

Alice is . . . independently wealthy . . . and involved in politics and she's very committed to promoting women. We met for lunch and I told her my life story and she said "what do you want to do with your life?" And I said "I want to change the world." And she said "how?" And I said "first I want to understand the law, and then I'm going to run a successful business, and then I'm going to train others to run successful businesses and then I'm running for governor of Ohio in 2027." And so, after a one-hour lunch, Alice Sparks paid $40,000 for my law school education. And when I asked her how I could repay her for such an amazing gift, she said "find a way to invest in women." So, Bad Girl Ventures is my way of repaying a debt to a good Samaritan.

So, how about 2027?

I will be running for governor in 2027. In 2002, I was a junior in college and a student advocate for my university, and I testified in front of the senate on behalf of post secondary education funding. And that year we actually secured $25 million for faculty pay increases. And I was mesmerized that you can change so many lives through public policy. And so in 2002 I had a press conference and I announced a 25-year-campaign for governor. No one had ever done it, so that's one reason I did it. More importantly, I wanted to make sure I had a lighthouse keeping me on the right path because I wanted to make a career out of changing lives through public policy.

Are you declaring a party affiliation or are you keeping that under wraps?

I'm going to keep that under wraps for now.