Female entrepreneurs have a harder time raising capital for their businesses than their male counterparts. Only 7% of venture capital goes to businesses led by women.
While many women pursue the dream of having their own business, many fail because of insufficient capital to cover start-up and operational costs. And that's unfortunate because research shows that women-led business enterprises are more profitable.
But take heart. If you're a female entrepreneur, there's good news. More businesses led by women are succeeding with crowdfunding.
Read the following information to learn more about how crowdfunding can help your business flourish.
Crowdfunding: A New Funding Option
Crowdfunding is a relatively new option for funding. It became available in 2013 with Title II of the JOBS Acts. The process allows businesses to solicit funds from investors using crowdfunding platforms.
And it has grown steadily. In 2015, the crowdfunding industry raised $2.5 billion. It's a way to raise money from many investors relatively quickly.
Crowdfunding Helps Female Entrepreneurs
Many women who start a business struggle to find the funding they need to get it off the ground. Venture capital is not usually a viable source of funding for most startups.
After going through their savings, they may max out their credit cards and line of credit. Eventually, they turn to family and friends who may be willing to help but aren't able to provide enough capital to keep the business afloat.
Crowdfunding is like having the support of a very large extended family. It is helping women shatter the old paradigm for raising capital to launch a business.
Research found that women are more successful than men in raising money for business ventures through crowdfunding. According to a Forbes article, Indiegogo reported 42% of funded campaigns were led by females.
One reason female entrepreneurs are successful in launching crowdfunding campaigns may be because women tend to be great storytellers.
Whatever the reason, crowdfunding continues to help more female entrepreneurs launch successful businesses.
A Look at How Crowdfunding Works
Donors who visit a crowdfunding site are interested in investing in an opportunity. They may be motivated by several reasons. Here are some possibilities:
- Getting a return on their investment
- Supporting a cause they believe in
- Solving a problem that will have an impact on people's lives
Different types of crowdfunding platforms offer investors various ways to get a return on their investment. Some platforms offer a stake in the company for investing. Others offer interest on money invested or certain rewards as incentives for investing.
When you create a crowdfunding campaign, you must provide certain information to help investors make a decision about investing. Here are some things you may need to include:
- How much you want to raise
- How much funding you already have
- How the money will be used
- How long the campaign will run
- What they will receive for their investment
Here is a list of crowdfunding sites. Visit the various sites to determine which would be the best fit for your business.
Launching A Successful Crowdfunding Campaign
Crowdfunding gives you an opportunity to promote your ideas to a more receptive audience. And it serves as a pre-launch where you can get a lot of valuable feedback on your product or service before it's introduced into the market.
Creating a perfect pitch is essential. Here is a great article with tips on how to develop an effective pitch for funding your initiative.
Planning your campaign is also important. Here are some tips to consider when planning a crowdfunding campaign:
- Check out previous successful campaigns and learn what they did well
- Hire a professional videographer to produce a presentation of your pitch
- Include a well-crafted pitch with eye-catching graphics for investors
- Establish your brand across all elements of your campaign
- Use social media to announce your launch
The journey begins with finding a crowdfunding platform that is right for you.
Ready to Pitch Your Innovative Business Idea?
Now that you have more information about crowdfunding, you may want to take the next step. If you're a female entrepreneur with a great business idea, we would like to hear from you.
At Score 3 Foundation, our mission is to uncover and empower original problem solvers. Go here to learn more about how we can help your business idea succeed. Also, make sure you check out Republic.co if you want to take the next step in equity crowdfunding.
Entrepreneurship may feel like it's a field dominated by males. But, many female entrepreneurs are having great success with crowdfunding. Read on to learn more