06/08/15 | Uncategorized

Why it's Time for Female Entrepreneurs to Embrace Both Sides of Crowdfunding

Women control a lot of money. It’s time they helped other women build the economy and bring a good return on investment.

By Geri Stengel (President & Founder, Ventureneer)

Money is the key ingredient needed for companies to grow. Yet women entrepreneurs who aspire to grow their businesses are 50% less likely to seek outside funding than their male counterparts, according to Access to Capital by High-Growth Women-Owned Businesses, a report by the National Women’s Business Council.

The media are awash with stories about the underfunding of women entrepreneurs by venture capitalists and the overt sexual harassment, unintended bias and an unwelcoming environment women face when trying to raise equity financing from either VCs or angels. No wonder women entrepreneurs aren’t seeking capital to the same degree as men! But our economy and your portfolio will both benefit if women entrepreneurs find a way around these roadblocks.

The Power of the Crowd

Crowdfunding – both equity- and rewards-based – is a hidden opportunity for women to fund their businesses, according to Stand Out In the Crowd: How Women (and Men) Benefit From Equity Crowdfunding.

The research was conducted by Ventureneer, a firm that researches, advocates and educates women entrepreneurs, and was commissioned by Dell and Ellenoff, Grossman & Schole, a leading securities and crowdfunding law firm. It turns out that individuals want to support passionate entrepreneurs whom they know personally or by reputation. The report looks at both equity- and rewards-based crowdfunding.

Stand Out In the Crowd finds that women entrepreneurs are outperforming their male counterparts on some equity- and rewards-based platforms, such as CircleUp and Kickstarter. Women outperform men because women have the skills, including project management, marketing, storytelling, meeting milestones, being frank when mistakes happen, and communicating clearly – without jargon, with realistic revenue projections and words that align with actions. Of course, they are also excellent at follow-up.

Wonder Technologies is a startup that has developed patent-pending technology so credit cards can be used as gift cards by any merchant. Like other startups, it has found that a crowdfunding campaign is a methodical and focused approach to funding in a concentrated period of time. The founding team, including Paige Cattano, raised $400,000 on Crowdfunder for product development and marketing/customer acquisition.

Laura Wagner of Digitzs plans to disrupt the virtual payment processing industry with a service that meets the needs of freelancers and professionals such as accountants and lawyers. She is just starting her campaign.

Founders Supporting Founders

To increase the number of women entrepreneurs successfully raising money, we need more women to invest in women. In 2013, only 19 percent of all angel investors are women and only 20 percent of all angel-backed companies are women-led, according to the Center for Venture Research. Currently, only wealthy people can invest in companies via crowdfunding.

While we may not have all the money we deserve, we do have enough to start making things happen for each other. Women have decision-making power over $11.2 trillion or 39% of all investable assets in the United States, according to Harnessing the Power of the Purse: Winning Women Investors, a report by the Center for Talent Innovation. More women than men graduate from college and women make most purchase decisions, so why not investment decisions as well, asks Chance Barnett, in an article for Forbes. Barnett is CEO of Crowdfunder, an angel investor, and a catalyst in equity crowdfunding legislation and the JOBS Act.

It turns out, women make better investors than men because women spend more time researching their investment choices, hold onto their investments longer and are less willing to take risks.

Crowdfunding is a hidden opportunity for women entrepreneurs to raise money. To get your free copy of the research behind that statement, go to Ventureneer.com. The Stand Out in the Crowd report provides tangible and actionable information including industry benchmarks, case studies, key insights from subject matter experts, and advice from successful entrepreneurs and investors.

Would you consider crowdfunding for your startup?

Photo credit: GongTo via Shutterstock



The Switch Editorial Team.

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