Everywhere I go, I hear stories from friends who are using crowdfunding as a way to finance their ventures. It turns out we're really good at it. With equal access to money, women are outperforming men on platforms like Kickstarter and Indiegogo.
Latest studies show that overall, women are 13% more likely than men to meet their Kickstarter goals, presenting a real opportunity for any of us who are currently raising money for our businesses. At Indiegogo, the stats are even better, where women are 61% more likely to meet their funding goals.
This democratization of funding is turning old school funding biases upside down. Because less than 6% of VC firms are run by women and 86% of venture capitalists are men, access to startup capital has historically been difficult for women. A recent WSJ article, “Kickstarter Closes the “Funding Gap for Women,” points to a study from the Ewing Marion Kauffman Foundation, reminding us that in the first half of this year, only one in eight companies successfully raising venture financing was headed by a woman. So it’s no surprise that women currently own a mere 30% of all companies.
With crowdfunding’s level playing field, the turf is changing rapidly! Finally, these skewed financing numbers are being overturned. It’s perfect timing for those of us who want to raise money for our new projects and ventures.
Success stories abound and women are supporting each other in a big way. On Kickstarter, women are outperforming men even in areas where we’re traditionally under-represented, like gaming and technology. An academic study published this summer by Ethan Mollick at the University of Pennsylvania’s Wharton School of Business and Jason Greenberg at New York University, shows that women are attracting key support online from other "women who are activists and want to reach out and help." Consequently, two-thirds of women-led technology ventures reached their fundraising goals on Kickstarter, compared to only 30% of technology ventures founded by men. Pretty amazing.
Video gamer Julie Uhrman’s an inspiring success story illustrates the trend. Her passion for playing and making games attracted 63,000 backers who contributed $8.6 million to her Kickstarter campaign, enabling her to expand her company Ouya Inc, so she could build an open platform TV game console. Julie’s venture became the second most successful campaign in Kickstarter’s history. She built on her phenomenal Kickstarter success very quickly, going on to raise another $15 million in venture money and hiring 28 employees.
Debbie Sterling offers another impressive Kickstarter story. Her toy company, GoldieBlox, promotes engineering concepts for girls. When Debbie launched a Kickstarter campaign in 2012, her goal was raising $150,000. She quickly generated $285,000 and within a few months, she had $1 million in preorders. GoldieBlox is now sold on Amazon and by 1,000 retailers across the U.S.
Indigogo has attracted women investors and start-ups in a big way too. Women are 61% more likely than men to meet their financial targets on Indigogo. Joanna Griffiths, founder of Knix Wear, a high-tech women's underwear line, raised a total of $100,000, mostly from women, with two Indiegogo campaigns, one in 2013 and one in 2014. Knixwear’s sales are expected to hit $1 million this year!
While crowdfunding doesn’t usually generate as much initial start-up money as the more traditional VC path, or provide start-ups with the ongoing support that can develop from a successful VC partnership, there are many benefits. The main one is that business owners get to keep full ownership of their businesses, giving away an array of rewards, instead of shares.
Over the next few weeks, we’ll be looking at additional ways women are funding their businesses online, using sites like CircleUp, an online investing platform that connects consumer and retail startups with accredited investors and Plum Alley, where women raise money for businesses of all kinds.
We’ll be talking with women (and men) who have run successful Kickstarter and Indiegogo campaigns, looking at the keys to mounting a successful campaign online, from creating a compelling story for your venture via text, photos and video, to figuring out how much money you want to raise and defining what you plan to accomplish with the money. We’ll also describe how to clearly lay out a roadmap, business strategy and timeline for your project and promote your project via outreach on additional social media platforms like Facebook and Twitter.
Yes, mounting a successful campaign via crowdsourcing takes a lot of time and energy, but raising money for any business requires an enormous amount of focused effort, strategic thinking and overall planning. The upside is definitely worth it. NINETY PERCENT of successful crowdfunding projects have turned into ongoing ventures and women-owned businesses are leading the way!
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Are you thinking about using crowdfunding to launch your business?
What have been your experiences raising start-up money?