ArdentCause: Women on the Verge

11/21/11Follow @XconomyDET

One day, Rosemary Bayer came to her friend Kathleen Norton-Schock with an idea sparked by her experience as a volunteer for the Michigan Council of Women in Technology (MCWT): How could a nonprofit better manage volunteers and resources while improving communication with grantees? Though they didn’t realize it at that moment, Bayer’s idea became the impetus behind ardentCause, a Ferndale, MI-based tech startup that was recently selected as a recipient of Detroit’s First Step Fund financing. ArdentCause is also one of Michigan’s first LC3 hybrid enterprises, an IRS designation created to bridge the gap between nonprofit and for-profit investing by providing a structure that facilitates investments in socially beneficial, for-profit ventures.

Bayer and Norton-Schock seem like the perfect pair to go into business together. They both are encore entrepreneurs with long, successful tech careers behind them. They both have a passion for “doing good”—in fact, they met as volunteers for the MCWT, an organization that helps guide women toward careers in math and science. Bayer, who before ardentCause invented NetBackup (now a product of Veritas) and was an executive at Sun Microsystems, possesses a voracious mind, while Norton-Schock crackles with energy. Both Bayer and Norton-Schock embody an emerging category of entrepreneurs—seasoned professional women looking for a second act that reflects their true calling. ArdentCause also reflects the challenges that female entrepreneurs can face when they’re seeking capital in the male-dominated investor circuit.

Bayer says ardentCause came to be mainly because she had plenty of time on her hands once her daughter moved out of the house to attend college.

“I started working longer hours until finally one day someone said to me, ‘What are you doing?’” Bayer says. Bayer realized she had gone as far as she could go at Sun Microsystems and was ready for a change, so she proposed her idea to Norton-Schock.

“We had heard horror stories about foundations giving X money for decades but not knowing how to measure the real impact,” Norton-Schock says. “Nonprofits themselves want to know they’re making a difference.”

Bayer set out to invent software that would allow nonprofits to track, on a daily basis, their results. Called CauseEffectz, the cloud-based software enables funding foundations and the nonprofits they support to accurately measure activity and resulting outcomes, graphically communicate those outcomes, and better chart progress and successes.

“We facilitate communication with funders and donors,” Bayer says. “Nonprofits can choose which pieces of data to share so that it has a collective impact. We’ve started at the front edge of the movement for accountability. We believe we’ll see other products in this space, but we’re ahead of the pack.”

While the current economic climate has certainly had an impact on the nonprofit sector, it’s still big business. Comprising nearly 1.7 million organizations nationwide, the industry accounts for 9 percent of all salaries paid to U.S. residents. Even during the 2008-2009 downturn, public charities reported $2.6 trillion dollars in total assets, Norton-Schock says. At the height of the recession, charitable contributions by individuals, foundations, and corporations slowed down, but nevertheless reached almost $304 billion. More than $227 billion of those contributions came from individuals across all walks of life. In Michigan, the nonprofit industry is the fourth largest sector in terms of employment, with over 47,000 organizations. Despite families watching their money more closely than ever, more than 83 percent of Michigan residents made a contribution to charity in 2010.

ArdentCause released the first iteration of CauseEffectz last spring, and the startup plans to continue refining it. In order to ensure that the software remains user-friendly, Bayer and Norton-Schock employ what they call the “Rosemary’s Mother Factor.” If Bayer’s less-than-tech-savvy mom can navigate through the product with ease, it has passed the “mother factor” test. That user-friendliness is part of what has made ardentCause a success—Bayer and Norton-Schock say they have 100 clients signed up to use CauseEffectz so far, and feel confident about the company’s future.

There were days, however, when Bayer worried her vision wouldn’t come to fruition in part, she says, because of a community of entrepreneurs that didn’t always feel inclusive. Bayer says the abundance of business-plan competitions in metro Detroit might be good for individuals, but it harms the spirit of collaboration.

“The contest thing is a very male approach,” Bayer points out. “It’s a style thing that’s just irritating.”

In fact, there is now national data that suggests a more collaborative, or, for lack of a better term, female (OK, I’m biased) approach to entrepreneurship might be the very thing that Michigan is missing.

Enter Sharon Vosmek, the CEO of Astia, a global nonprofit organization based in San Francisco that advocates for women’s full participation as entrepreneurs and leaders in high-growth businesses, fueling innovation and driving economic growth. She estimates that six million jobs could be created nationally in five years if women had more access to capital.

With that goal in mind, Astia is set to launch a three-year initiative in Michigan with Inforum, an advocacy group for professional women, that will take 25 women entrepreneurs and nurture their startups to viability by both building out the local entrepreneurial ecosystem and offering participating entrepreneurs access to Astia’s global network of business mentors.

The challenge at hand, Vosmek says, is getting men and women into the same business networks—a challenge that Vosmek says manifests itself both societally and internally. “It’s critical that men and women are peers,” Vosmek says. “Investors tend to invest in teams, and the reality is that most investors are men. That societal hurdle becomes extremely poignant for companies led by women that are trying to raise capital. Too many women are opting out of high-growth entrepreneurship because they’re self-assessing differently than men.”

By integrating men’s and women’s business networks, Vosmek says they’ll learn how one another perceives and articulates success and failure. Vosmek says that the hard data backing the Michigan initiative elevates it from a feel-good program to one that makes good economic sense.

“Research shows group intelligence correlates to innovation, and group intelligence is directly affected by how many women are on the team,” Vosmek says. “How does the group intuit each other, understand each other, and dialogue? Women are actually needed for a business to stay competitive.”

That sentiment is echoed by Bayer. “When you’re starting a company—especially a tech company—I wish we could work together more and share those limited resources.”

“We’re always looking for a magic tool to create jobs,” Vosmek says. “But if we focus on ensuring women can fully participate, that will pay off more than anything.”

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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  • Carmen

    Congratulations to two very talented ladies, Bayer and Norton-Shock, on their latest venture, in which both corporates and non-profits benefit through information sharing. They have made a huge impact through Michigan Council of Women in Technology and I have not doubt that this new venture will be highly successful.

    Well done!