Gender Wealth Strategy

Women’s Wealth System

In this module of Gender Wealth Strategy, you will learn about the Women’s Wealth System©, an inclusive and sustainable solution for building financial security and wealth. We continue the story-telling approach used previously to introduce you to a new system of finance and investment designed to help women and HeForShe advocates build sustainable businesses, raise flexible revenue-based growth capital, and make profitable and impactful investments.

In a return visit to Healthy Workplaces LLC, Mark Livingston and Sarah Ellis of The Social Impact Foundation meet with the ownership and management team to present and discuss the Women’s Wealth System.

What is a System?

Before we start, however, let’s make sure we’re on the same page regarding the definition of “system.” BusinessDictionary.com defines a system as: “an organized, purposeful structure that consists of interrelated and interdependent elements. These elements (or components) influence each another–directly or indirectly– to maintain their activity and existence of the system, to achieve the system’s goals.”

In designing this new system of finance and investment, we focused on these parts of the definition:

  • An organized and purposeful structure
  • With interrelated and interdependent components
  • Influencing each other (directly or indirectly)
  • To achieve the system’s goals.

Now that you know the formal definition of a system, let’s return to Healthy Workplaces and meet again with Yvonne, Tess, Maria, Marcie, Raul, Meg, Lisa, and Jalen.

Yvonne: Mark and Sarah, are you going to introduce us to the Women’s Wealth System© today?

Mark: Yes, we are Yvonne. My research into the new business and investment strategy of Positive Impact was presented at the 10,000-foot level. In the Q&A meeting with this team several weeks ago, we came down to the 5,000-foot level. The “side-by-side comparison” I sent last week brought you down to the 1,000-foot level. Today, we’ll land smoothly on the runway.

Yvonne: Great. We’re excited to learn more.

Mark: Sarah and I have created a series of short videos to introduce you all to the Women’s Wealth System. After each video, we’ll be glad to answer any of your questions. The first video provides a quick overview of this inclusive and sustainable solution.

Maria: Mark, I have two questions. How did you come up with the name HeForShe? And second, how will you prevent the Women’s Wealth System from becoming an “old boys’ club” like the current system?

Mark: Great questions, Maria. First, I did not come up with the name. HeForShe is a highly regarded program of UN Women, the United Nations organization dedicated to gender equality. Emma Watson, the accomplished actor and human rights activist, is spokesperson, and Elizabeth Nyamayaro leads this organization. Ms. Nyamayaro presents an inspiring TED Talks on this initiative called “An Invitation to Men Who Want a Better World for Women” if you want to learn more.

We’ve taken several measures to ensure the Women’s Wealth System and the Women’s Impact Investing Network stay focused on closing the gender wealth gaps. Examples include: (1) our advocacy of revenue sharing instead of debt and equity for financing growth and making wise impact investments, (2) our learning community and platform with high-quality programming, coaching, and support, (3) our requiring business models and plans to address how they are creating positive impact for women, and (4) our community forum connecting women and HeForShe investors with high-quality and pre-vetted 3X-in-10™ Revenue Sharing Offers from investment-ready business or social enterprises.

If there are no other questions, let’s move to the next video which focuses on the 3X-in-10™ Revenue Sharing Offer.

Marcie: Sarah, I need you to clarify something. In the Michael “Luni” Libes video, he showed a slide with revenue-based finance sandwiched between debt and equity. In this video, you use the term “3X-in-10™ Revenue Sharing Offer.” Is this a debt-like option, but with flexible payments?”

Sarah: That’s correct. Revenue sharing is based on the concept of a revenue royalty. It’s a debt-like financing option, but with flexible payments based on a percentage of top-line revenue that goes up or down. We provide enterprises with a promissory note and subscription agreement to document the revenue sharing terms.

Tess: Why ten years for the investment period?

Mark: The rationale is based on my forty years of experience working for and consulting with young ventures, establish enterprises, and global corporations. I’ve seen first-hand how long it really takes enterprises to scale their new business models and achieve sustainable growth. It always takes longer than hard-charging executives, young founders, or impatient and profit-driven investors think.

The ten-year investment period provides entrepreneurial teams – like yours at Healthy Workplaces – with the breathing room to scale a new impact-driven business model in a sustainable manner. For your prospective investors, it provides them with liquidity in the form of quarterly revenue sharing payments over ten years. This enables them to take advantage of two principles required for long-term investment success: the Time Value of Money and The Magic of Compounding Interest.

We believe the ten-year time frame is a winning formula for attracting the right investors and providing them with a compelling financial and social return. It’s why the potential internal rate of return (or IRR) of a 3X-in-10™ Offer comes out to be 23.3%. It also explains why a ten-year equity investment portfolio only delivers an average annual return of 8.7%.

Meg: Did I hear that potential return on investment correctly?

Sarah: Yes Meg, you did. We’ll be glad to stay afterward to show you how 3X-in-10™ Revenue Sharing works. We even created three calculators, one for enterprises and two for investors. Our model and calculators were validated by two finance experts with 50 years of angel, venture capital, and private equity experience between them.

Raul: Why the 3X multiple?

Mark: Because we wanted enterprises to make a ten-year revenue sharing investment offer significantly higher than the 2.3X result discussed in Key Finding #5. The return for 2.3X in 10 works out to just 8.7% as Michael Libes showed in his video. By the way, this number is consistent with the ten-year Wall Street forecast for public and private equity markets of 7–10%. And remember too, 85% of angel and venture capital investors fail to even beat the long-term S&P 500 Index, which has been in the 6–7% range.

So Raul, don’t you think Healthy Workplaces would attract a few interested investors with a 3X-in-10™ Offer that has the potential to deliver 23.3% a year? And, we haven’t even talked about the higher level of positive impact your enterprise will be able to generate for the people and organizations you serve.

Yvonne: Mark, did you “risk adjust” your model for a portfolio of revenue sharing investments?

Mark: Yes Yvonne, we did. We did it two ways. First, we only feature business or social enterprises to our 10X Impact Community Forum with three years of operating history. Since 40% of young ventures fail by year three, this reduces investor risk and ensures enterprises have a solid base of revenue to pay back a revenue sharing loan.

Second, we used business failure rates in the U.S. from 1994–2015 to risk-adjust a portfolio of ten 3X-in-10™ Revenue Sharing Offers over a ten-year time period (the same time period Michael Libes described in his video). Even with this worst-case scenario of business failure built into our model, the 3X-in-10™ Revenue Sharing Portfolio outperforms the equity investment portfolio by 56% (13.6% to 8.7%). And, as we’ll show you in our 3X-in-10™ Calculators after the meeting, reinvestment of royalty payments for ten years in other high-quality 3X-in-10™ Offers potentially doubles the 2.3X result to 4.6X and increases the average annual return to 30.1%.

Jalen: Isn’t 3X-in-10™ designed for a different type of investor?

Sarah: Yes, it is Jalen. The 3X-in-10™ Revenue Sharing Offer is not a “get-rich-quick” or “too good to be true” scam. It’s a long-term, income-producing investment focused on sustainable impact, not short-term profit (or greed). Revenue sharing is a financing and investing strategy that’s designed to align both enterprises and investors around the mutual goal of building sustainable, high impact enterprises that create enduring social and economic value. This is a “build-to-keep” strategy that will enable enterprises to solve pressing social, economic, and environmental problems. The Silicon Valley Model is a “build-to-flip” model only concerned with the 10X exit or 10X profit needs of investors, lenders, and fund managers.

Okay, let’s move on to the third video in our series on the Women’s Wealth System. This one focuses on the Women’s Impact Investing Network©, our online learning platform.

Marcie:  What will WIIN enable our enterprise and our employees and their families to do?

Sarah:  Marcie, there are four  priority “jobs” we help woman business owners, entrepreneurs, investors, and HeForShe advocates accomplish. These include (1) building sustainable, high-impact enterprises, (2) raising flexible revenue-based growth capital, (3) making profitable revenue-based investments in enterprises led by women or in business models that positively impact women, and (4) building long-term financial security and wealth.

We provide members with the tools, resources, and support to build a high-impact enterprise that grows sustainably and/or make profitable investments in high-quality 3X-in-10™ Revenue Sharing Offers. Ultimately, we want to help everyone gain control over their financial destiny and have confidence that no matter what takes place “out there,” they have the financial reserves and assets to survive and thrive. That’s what we mean by long-term financial security and wealth.

Jalen: Mark, do you know if self-directed IRAs can be used to invest in 3X-in-10™ Revenue Sharing Offers on a crowdfund investment platform?

Mark: Yes Jalen, they can. For those of you in the room who don’t know what a self-directed IRA is, let me explain. A self-directed IRA account offers IRA holders the ability to choose the investment types that meet their needs. Most IRA providers limit your choices, but a self-directed IRA account empowers investors to put funds in alternative investments like 3X-in-10™ Revenue Sharing Offers and enjoy the same tax advantages as regular IRA accounts.

So, let’s move on to the fourth video in our series. This video focuses on the Gender Wealth Strategy© learning program.

Lisa: Can you name a few businesses using the positive impact strategy?

Sarah: Sure, you’ll recall that one of Mark’s findings in his 2.5 year research project focused on a global movement to redefine success in business. This movement–the global B Corp movement–embraces the creation of enduring social and economic value. Other similar concepts include sustainable business and sustainable investment. At the Women’s Impact Investing Network, we use the words business impact and sustainable impact to communicate this same strategy of generating social impact and economic value at the same time.

You can find a directory of Certified B Corporations on the B Lab website. We feature 50 of these enterprises in Business Impact Accelerator©, our online business development program and platform. Some of the 2,500 business and social enterprises that have become B Corp Certified include Danone North America, Ben & Jerry’s, Patagonia, Revolution Foods, Tom’s, Seventh Generation, Eileen Fisher, New Belgium Brewing, and Greyston Bakery, and many more.

Plus, there are other enterprises–big and small– pursuing positive impact strategies, but have not become B Corp Certified (yet). These include Unilever, Red Hat Software, Whole Foods Market, Container Store, and Costco, among others.

I would love to see Healthy Workplaces LLC become a Certified B Corporation in a year or two.

Raul:  Don’t you have a shorter version of Gender Wealth Strategy?

Sarah:  Yes, we do Raul. It’s called the Gender Wealth Strategy Mini-Course. It has three short videos and was designed to help you engage other team members or significant others at home about closing the gender wealth gaps and building financial security and wealth.

If there are no further questions, let’s move to the fifth video in our series, which focuses on Business Impact Accelerator©, our team-based business development platform.

Yvonne: Mark, can you talk about readiness for growth and readiness for investment?

Mark: Yvonne, I could talk all day about readiness or mostly, the lack thereof. This issue is one that most management and leadership teams avoid. They assume their organization is on board with the desired strategy and prepared to deliver sustainable results. However, reality on the frontline of an organization is much different than in executive offices. So, rather than take the time to accurately assess readiness, a decision is made by management to launch a new product or implement a new strategy. The result can be disastrous and create even more problems for the enterprise.

During my days as a consultant, I often referenced a scene from The Last Samurai motion picture starring Tom Cruise, Ken Watanabe, and Tony Goldwyn to illustrate this point of readiness or lack of readiness. When you have a second, check out “They’re Not Ready.” You’ll see what I mean.

Maria: Can the Business Impact Accelerator platform insulate us from an economic downturn or crash like in 2008–2009?

Mark: No, there is nothing that would have insulated Healthy Workplaces or any other enterprise from that disaster. You know the Geary Rummler quote I often use: “When you put a good performer in a “bad” system; the system wins every time.” However, I did design Business Impact Accelerator to help you strengthen your business model, value proposition, cash flow, and internal systems so you will be ready for the next economic downturn or shock.

Make no mistake Maria, Yvonne, Tess, and Healthy Workplaces team, you will experience a “shock” not of your doing sometime in the near future. Gender Wealth Strategy and Business Impact Accelerator provide you with the tools to understand our biased and broken financial and investment system and take appropriate actions to defend against these significant risks and threats to our personal and professional well-being.

Well, I’m afraid we have to cut this discussion short and move on to our next video. This one focuses on our 10X Impact Forum.

Meg: Do you allow revenue sharing offers other than 3X-in-10™ to be featured?

Sarah: Yes we do Meg. For example, a viable and high-quality 2X-in-5 Revenue Sharing Offer could be crafted by an impact-driven enterprise with a sustainable business model positively impacting women.

Our 3X-in-10™ Model is a hypothetical model that delivers a potential financial return attractive to a wide-range of investors, including angel and venture capital investors. However, you and your team may be able to craft an equally attractive offer, but with a different revenue sharing percentage, growth rate, and repayment terms than the model 3X-in-10™ Offer. We take all of these factors into account during the Investment Readiness Check.

Well, we’ve arrived at our last video in this series on the Women’s Wealth System. This puts the ribbon on our inclusive and sustainable solution for closing the gender wealth gaps and helping women and HeForShe advocates build financial security and wealth.

Yvonne: Sarah and Mark, thank you for sharing this information with us. You’ve given us a lot to think about. I know several folks have to leave for a Skype coaching session with a client. If anyone would care to stay, we have the conference room booked for another thirty minutes. Would you be willing to walk us through the 3X-in-10™ Revenue Sharing Model and Calculators?

Marcie: Sarah and Mark, your solution is going to help a lot of women and HeForShe advocates in the U.S., Canada, and world.

Sarah and Mark: Thank you Marcie, Yvonne, and Healthy Workplaces team.

In conclusion, what are your pain relievers and gain creators?

To help you process the information presented in this section of Gender Wealth Strategy, refer to the Value Proposition Canvas you sketched at the end of the previous section. In that short exercise, you identified priority “jobs, pains, and gains” related to raising capital or making investments that build financial security and wealth.

In this reflective exercise, we ask you to complete the left side of the Value Proposition Canvas based on what you learned about the Women’s Wealth System. Think about the information presented in this section. What spoke to you directly? Reflect on this for several minutes and then in the Value Map area of the Canvas, write down 2-3 “pain relievers” and 2-3 “gain creators.” You can write “Women’s Wealth System” in the area set aside for “products and services.”

After completing the exercise, proceed to Take the Next Step, the next module of Gender Wealth Strategy.

Published by Mark Livingston

Mark Livingston is President of The Social Impact Foundation and creator/author of the WIIN Learning Platform. He is also a Certified Pickleball Coach and Teaching Professional at Coach Mark LLC (www.coach-mark.com).

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