Photo by Megan Leigh Barnard

Crowdfunded Cupcakes?

Startups are small by necessity. Banks are wary and borrowing is burdensome for businesses that don’t fit into the traditional boxes. Friends and family financing only goes so far, and venture capital comes with significant strings attached—if you can even get it.

That’s why the gluten-free folks at Bake Me Happy in Merion Village took a different path to fund their social media outreach.

“I was introduced to Kiva and their expansion into Columbus, though I was already familiar with the international aspects of Kiva,” explained Letha Pugh, who founded Bake Me Happy with her partner, Wendy Miller Pugh in 2014. “Initially, I was hesitant because it didn’t even require a credit score. It’s kind of like crowdfunding, but it’s a loan.”

Kiva gained initial acclaim by helping transform the lives of ambitious business owners in the developing world through online interest-free funding. It enabled strangers a world away to invest in change, not just charity.

These weren’t startups so much as upstarts—turning skills and services into sustainable small businesses in some of the poorest countries on Earth. Helping women in particular achieve financial stability and independence in parts of the world where both were elusive created a movement.

The reason we refer to such endeavors as “movements” is because they eventually achieve their own velocity. Kiva has since expanded its mission and footprint to enable small businesses in a growing number of cities around the globe to receive “microloans” as well.

“We were looking to expand our marketing, but it was something that never seemed to fit into our budget,” Pugh said. “We’ve received SBA loans before, so we knew that process. But Kiva was surprisingly easy by comparison.”

Prospective Kiva borrowers create a campaign, not unlike Kickstarter, which investors can then fund at a smaller scale than most banks are willing to consider, with terms that are far more flexible. If you need a few thousand dollars, a bank will probably just offer you a credit card—and the juice starts running immediately. Kiva offers zero-interest loans that borrowers pay back on a monthly basis.

“It’s kind of a social credit score. Depending on the loan and what it’s for, Kiva tells you the percentage of folks you need to back your project before you go live and the campaign becomes public,” Pugh explained. “Once you hit that threshold, you start seeing investors from Arizona to Australia. We were funded in 20 hours once we went live.”

Kiva’s loan amounts may be small, but their repayment rates are the envy of the industry at around 97 percent. Defaults are relatively rare because borrowers have a connection to their investors.

“If you have a close network, that creates accountability,” she said. “Because if you borrow money from family and friends, you want to make sure you pay them back. You have to look these people in the eye.”

“We didn’t take a huge amount of money, but we’ve been able to do a couple of videos. And, we’re in the process working with a communications company to increase our Instagram presence, our Facebook presence,” said Pugh. “That’s the one thing we were missing as a wholesale bakery.”

Bake Me Happy’s recipe for success is as simple as the couple’s division of duties. Letha has the entrepreneurial insight that complements Wendy’s expertise in the kitchen. This partnership and shared purpose has helped the company expand rapidly.

Despite having started just two years ago, Bake Me Happy still balances commercial success with hometown street cred. Their plan to expand has paid off, as the Aramark vendor now supplies the OSU campus and the Horseshoe with gluten-free treats. But they’re also a stop on Hot Chicken Takeover’s 2016 Neighborhood Tour—featuring gluten-free fried chicken, biscuits, and mac and cheese. It’s community connection as much as it is commerce.

“Kiva does some social enterprise work as well. There’s a school where they teach folks how to help businesses improve their social media marketing,” Pugh explained. “You pay a minimal fee and they take folks who may have struggled to build a career, or may not have gone to school, through a social media boot camp.”

But it’s more than just a friends and family campaign that eventually attracts the interest of strangers. Kiva allows communities and customers to collectively fund local companies they want to support.

“It shows that we support small businesses, because funding is probably the greatest issue small companies like ours run into,” Pugh said. “You may already be up and running, but when you need to grow, you just hit a wall. [Kiva] proved that people believed in us.”

Unlike the impersonal business exchange typical of a bank loan, Pugh shares a genuine connection with her investors, sending them updates on the difference their dollars have made.

“The thing I love most is that it wasn’t just the money, you get a boost in confidence. People learn about your company, they read your story, and they choose to loan you money,” Pugh explained. “It’s been a great experience meeting other Kiva borrowers. I feel like there’s a support system built into the loan, building relationships with other Kiva-funded companies—giving people opportunities to help each other.”

For more about other local ventures funded by Kiva, visit