This year’s Crasher projects have been in full swing the past few weeks. Since we returned from DC, (four) groups have been working like crazy to prototype their ideas on creating more accessible lending options for cooperatives, through a cooperative fund. You’ll find their individual recaps through the links below on the steps they’ve taken so far.
Team members: Danielle Frawley (team lead), Erin Ballard, Brittany Hilton, Chad Holz & Ashley Pierce
We’ve been lucky enough to secure four well-respected judges to provide feedback and direction to our teams. Over the next several months, each of the judges will be piping in with their thoughts on how the teams can improve their projects and refine their focus.
As you can see, the teams have jumped in with two feet and already have plans for what they’ll revise for their second round of prototyping. In early May, each group, along with our judges will be meeting up through a Google Hangout to review more in-depth results from their first round of work. Here’s a glimpse for the rest of the steps they’ll be taking towards a successful cooperative fund:
Team members: Danielle Frawley (team lead), Erin Ballard, Brittany Hilton, Chad Holz & Ashley Pierce
Our prototype consisted of images of different pages of our website that we would be running our CU Grow Foundation through. Brittany was in charge of putting the images of the website screenshots together and we all provided input for revisions. Erin was responsible to provide strategic insight for the website due to her background with content management software. Ashley was in charge of putting together our business plan through Google Docs so that we could all provide insights and revisions as we saw fit. Chad was in charge of putting together a database of different grants and programs already available to cooperatives. I was in charge of putting together a brief survey that our group could send out to cooperatives to gain more insight into changes we might need to make to our prototype. We were all responsible for getting survey feedback and feedback on our prototype.
We hit quite a few roadblocks in accomplishing our tasks. The largest roadblock was the difficulty we had in communicating with the cooperatives. It was difficult to find contacts at cooperatives and once we did find contacts the contact information we had normally only consisted of physical mailing addresses and phone numbers. Thus, it really slowed down our progress because we had assumed that we would simply be able to email our surveys to local cooperatives. Chad and Ashley were planning on presenting the prototype to a local cooperative group in Austin, but the group didn’t meet in March, so they had to reschedule for April.
Formally writing out the business plan has made us question a lot of the variables that has been unanswered when we first left DC. We’ve all been working together to come up with solutions to those variables. We’ve also learned through contacting Adam Schwartz that there are credit unions out there lending to cooperatives, so rather than recreate the wheel, we will be contacting those credit unions to find out how they handle the risk management of lending to cooperatives and use their insight to help us build our CU Grow Foundation.
Team members: Sean Flynn (team lead), Justin Mouzoukos, Lindsay Estok, Blake Woods & Josh Smith
Based on initial interviews with a few cooperatives who responded to our initial survey, we found that all of the co-ops used alternative means to initial fund their operation. We also found that some had applied for business loans, with only one being able to secure business loan funding (from a credit union, too). A third conclusion was that all of our co-ops who responded would like to see a line of credit product that could help them with cash flow/budgetary restrictions.
With this information, we attempted to raise a pool of funds to create a very rudimentary line of credit, but were only able to raise approximately $100 from our own events. We encountered a few obstacles with our crowd funding idea because we found it difficult to sell the idea without an actual co-op being represented in our pitch. We are currently in the process of reaching out to individual cooperatives that responded to our survey to identify their specific needs, with the intent to use their story as part of our fundraising pitch that will fund the prototype.
From our initial discovery and research phase, we’ve learned that co-ops and small businesses are busy! While we already knew this was going to be a challenge, but with limited (three) responses to our survey, it was difficult to make generalized assumptions about coops needs overall. We also have found (as we expected), that coops are not liquid. Cash is not always readily available, and having relatively inexpensive access to cash would help coop directors manage and even grow their organizations more effectively.
We know there is a market for a cooperative line-of-credit. What we really want to know now is how big of a market it is and what kind of barriers or competition will our product face? We also want to know how will this product perform once delivered and what will it be used for? And perhaps most importantly – will it provide a creative, competitive, and affordable solution for cooperatives? Raising even another $400 will allow us to offer a $500 line to a small cooperative and see how it behaves. These are the questions we will answer and obstacles we will address in the coming weeks.
The goal of our prototype is to discover if there is a market for a cooperative fund and if so, is this initiative something that cooperatives would want to be a part of? To find the answer, we have been conducting a series of phone, e-mail, and Google Hangout interviews with a diverse group of cooperative leaders in two cities with reputations as trailblazers in the cooperative movement – Portland, Oregon and Madison, Wisconsin. After in-depth interviews with these leaders, we will have a better understanding of what Portland and Madison area cooperatives want and need from their financial institutions.
Choosing our two cities was easy, as was finding several thriving cooperatives to interview. The hardest task thus far has been pitching the idea of a cooperative fund to cooperative leaders. Many of them are skeptical that we are working to find them new ways to gain access to capital without there being some sort of catch, so we have encountered some resistance from our interviewees. With a little reassurance from our teammates tasked with building a relationship with these cooperatives, several of these leaders have come around and have either agreed to be interviewed or have already submitted their responses to our questions.
The insights we’ve gained from these interviews will allow us to tailor the cooperative fund concept to fit the needs of our partner cooperatives. Our final step will be to walk our chosen cooperative leaders through the model once it has been further developed.
Team members: Chris Friederich (team lead), James Marshall, Jennifer Tebbe & Meghan Storck
Our prototype essentially boils down to a “crowd-funded” pool of capital either owned or administered by a credit union for the purpose of lending to cooperative businesses. As we attempted to flesh this out on our last day in D.C. we kept running into more questions. We decided that our best option was to pursue two courses of action:
write a survey and send it to all of the cooperative businesses we could find in the Madison, WI area and
continue vetting the crowd-funding idea with credit unions and other professionals.
Although our email blast included close to 50 co-ops of various types (asking for information about the co-ops, how they got started, their ongoing capital needs, etc), we quickly began to realize that the survey did not reach the audience we needed, so it did not provide an accurate picture of the needs of the co-ops.
Because there is no reasonable way to find contact info for people who may be looking to start a co-op, we revised the scope of our model to include all emerging small businesses still struggling to get started or who have developed a need for lending in their daily operations while they work toward self-sufficiency.
While we were waiting for our survey results to come in, we focused on vetting some of the specifics of our prototype with various subject matter experts. We learned more about the challenges in structuring and starting up a co-op. We found that there are some other large institutions that already specialize in lending to co-ops, however, they typically cater to co-ops that are larger, more established and focused in agriculture, utilities, and housing. This would lead us to believe that there is a need for the type of lending our prototype aims address.
We will be moving forward by modifying our survey to reflect the projected changes to our model and working to get it front of as many small business owners as possible. While we still feel there is promise in the basic structure of our prototype we will take the next 30 days to work on some of the specifics that can really make or break it.
Below is our little recap from this year’s Crash the GAC and what our group has planned over the next several months. We’d love to hear your own stories and takeaways in the comments.
Member Business Lending Projects
We don’t want to give too much away, but this year’s Crasher projects are not only exciting, but will make a huge impact on why we all go to DC: our members. Each of the four groups have a set of milestones they’ll complete before their first round of presentations to the judges. The ideas, as they stand, are around designing a new credit union product or service that makes it easier to launch and run a small business.
Their prototype presentations are due April 2nd, at which point we’ll share them with you and look forward to your feedback.
Our final assignment before we head off to D.C. is to write some starter research questions! Imagine that you are sitting with a small business owner. What do you want to ask them? How would you learn about their behavior, perspectives, biases, quirks?
Write 5 to 10 questions.
As you write your questions, remember some of the samples we started with from the first homework assignment. Here are some additional things to keep in mind:
• Let one person guide the interview
• Give pauses for others to pitch in. Don’t make it an interrogation.
• There really are no wrong answers.
• Don’t ever correct people
• Use open-ended, non-assuming questions
• Let the conversation meander, but cover topic areas.
• Know the protocol, and be prepared to abandon it.
• Take lots and lots (and lots) of notes, but not on your computers
• Mirror their language. Even if it’s wrong
• Give ample listening and empathy cues
• Allow quiet pauses, for people to reflect
• It’s not about you – don’t talk about yourself
• Ask why, why, why, why, why!
As you write, consider this quote from anthropologist and ethnographer Clifford Geertz:
“Man is an animal suspended in webs of significance he himself has spun… I take culture to be those webs, and the analysis of it to be therefore not an experimental science in search of law but an interpretative one in search of meaning.”
JOIN OUR GOOGLE HANGOUT!
Holly Fearing will be hosting a Google Hangout on Tuesday, February 19th at 2:00 p.m. CST. If you’re interested in hopping into a conversation on this topic and prepping for the GAC, join us! More details can be found on the Trust calendar.