{"id":7016,"date":"2018-07-22T08:08:12","date_gmt":"2018-07-22T12:08:12","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=7016"},"modified":"2018-07-22T08:08:12","modified_gmt":"2018-07-22T12:08:12","slug":"ways-women-entrepreneurs-can-tap-crowdfunding-successfully","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=7016","title":{"rendered":"Ways Women Entrepreneurs Can Tap Crowdfunding Successfully"},"content":{"rendered":"
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\"\"<\/a>It takes money to make money, as the saying goes. For female entrepreneurs, that money can be elusive when starting a business or trying to grow one. As Linda Abraham \u2014 a serial entrepreneur, angel investor and start-up board member \u2014\u00a0told me<\/a>\u00a0a few months ago when I asked her to name the biggest hurdle for female entrepreneurs: \u201cRaising capital. I am sorry to say that, but it\u2019s true.\u201d<\/p>\n

In the past few weeks, I\u2019ve interviewed several women in the early stages of starting ventures and each said that having enough seed money in the bank is what\u2019s slowing them down. A few said they\u2019ve considered launching a crowdfunding campaign \u2014 raising cash online through a campaign inviting people to help you. But they were nervous about taking that non-traditional lending route.<\/p>\n

Read on Forbes<\/a><\/p>\n

Women Entrepreneurs Are Using Crowdfunding More<\/h3>\n

Crowdfunding can actually be a very effective way to get a business off the ground and keep it rolling. And women are taking advantage of it more and more. These days, 47 percent of successful campaigns on the popular crowdfunding site\u00a0Indiegogo<\/a>\u00a0are run by women, according to Sarah Meister, the site\u2019s outreach manager.<\/p>\n

There are also a few crowdfunding platforms specifically for women entrepreneurs, such as\u00a0iFundWomen<\/a>\u00a0and\u00a0Women You Should Fund<\/a>. Local\u00a0cohorts of iFundWomen<\/a>\u00a0have been launched in Boston, Nashville, Newark, Philadelphia and Raleigh-Durham, as well as the state of Maryland.<\/p>\n

Last November, New York City launched a program to lend women business owners money through a crowdfunding site called\u00a0We Fund: Crowd<\/a>. The premise: loan a woman at least $25 and after you get the money paid back, you can then lend it to another woman\u2019s business plan or simply put it back in your pocket.<\/p>\n

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Jen Earle<\/figcaption><\/figure>\n

To address the concerns of women entrepreneurs over 50 (or women that age hoping to start businesses) who are jittery about using crowdfunding, I spoke to three experts on how to create winning campaigns. One was Meister and the other two are:<\/p>\n

Jen Earle, CEO of the National Association of Women Business Owners (NAWBO) and council member of the\u00a0National Women\u2019s Business Council<\/a>(NWBC), a nonpartisan federal group that advises the President, Congress and the U.S. Small Business Administration on economic issues important to women business owners.<\/p>\n

Donna M. De Carolis, dean of the Charles D. Close School of Entrepreneurship at Drexel University and a member of the editorial board of\u00a0EIX<\/a>, the Entrepreneurial and Innovation Exchange, a social media learning platform funded by the Schulze Family Foundation.<\/p>\n

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Donna M. De Carolis<\/figcaption><\/figure>\n

\u201cOver recent years, women have become very active in crowdfunding platforms,\u201d said Earle. \u201cIn fact, recent data on Kickstarter shows that on average, they are 9 percent more successful than men.\u201d One reason, Earle said, is that women, on average, set lower funding goals than men. \u201cThe average funding goal for men was much higher than for women, but the average amount\u00a0pledged<\/em>\u00a0was about the same,\u201d she noted.<\/p>\n

Some types of businesses are better bets for successful crowdfunding campaigns than others. Said De Carolis: \u201cOverall, crowdfunding is more appropriate if you have a gadget to sell or are a local small business. Food products, fashion and nonprofits in some cases, tend to have success with crowdfunding.\u201d<\/p>\n

Here are the three experts\u2019 eight tips for crowdfunding wisely:<\/p>\n

1. Be sure you have a following.<\/strong>\u00a0\u201cBefore you jump into a crowdfunding campaign, you need to have a cadre of people who will recognize you as having legitimacy or expertise in an area,\u201d De Carolis said. \u201cA social media presence with a lot of followers can do a lot to legitimize your product and make\u00a0you\u00a0<\/em>legitimate in a crowdfunding space\u2026 At the end of the day, even with venture capital funders, 99 percent are investing in the\u00a0person<\/em>, not the business.\u201d<\/p>\n

2. Tell your story well.<\/strong>\u00a0Here\u2019s where women can \u201chave an edge,\u201d said De Carolis. \u201cThis is a platform to pour your heart out and talk about your product and your story and get to the emotion. In my view, that contributes to the power of women in crowdfunding. Women bring authenticity, transparency, our connection with emotion. We can tell a story about our product or gadget that can be more powerful.\u201d<\/p>\n

Meister agreed: \u201cWomen are successful crowdfunders because they\u2019re great storytellers and great marketers. They\u2019re better at writing and talking with less dry language [than men] and they often have the altruistic component\u2026 Having that panache and the willingness to be your true self is why women have been so successful on this platform.\u201d<\/p>\n

3. Know your audience.<\/strong>\u00a0Said Meister: \u201cEntrepreneurs with successful campaigns often start a year before launch building their audience, testing their audience, making sure their content is resonating with their customers, so when they launch they are not just putting something out into the ether without really feeling it out.\u201d<\/p>\n

And, she added, \u201cyour email list is going to be your best friend.\u201d In general, you can plan on converting one to five percent of your email list to donors to your crowdfunding campaign.<\/p>\n

4. Figure out a realistic crowdfunding goal and timetable.<\/strong>\u00a0Create a budget spreadsheet and list the basic expenses you will encounter in launching your business, including anticipated taxes and fees. Find other similar businesses and projects that have crowdfunding campaigns and note how much they had as their goals.<\/p>\n

A one-month campaign is generally best, said Meister.<\/p>\n

5. Decide on a crowdfunding model.<\/strong>\u00a0\u201cWomen entrepreneurs, at any age range and industry ,must evaluate the type of crowdfunding platform that is best for them,\u201d said Earle. \u201cThe findings in the NWBC March 2018 reports,\u00a0Crowdfunding as a Capital Source for Women Entrepreneurs: Kickstarter, a Reward-Based Crowdfunding Platform<\/a><\/em>\u00a0and\u00a0Crowdfunding as a Capital Source for Women Entrepreneurs: Kiva, a Non-profit Lending Crowdfunding Platform<\/em><\/a>\u00a0as well as previous research show that there are fundamental differences in crowdfunding platforms.\u201d Review the different platforms based on your campaign goals, Earle added.<\/p>\n

Some platforms focus on purely on donations and no one expects a return on their investment. Others offer rewards for donations, such as free products from the company. Other crowdfunding campaigns offer a small percentage ownership equity stake or royalties on sales. Finally, there\u2019s peer-to-peer lending, where you pay back the amount loaned to you interest-free.<\/p>\n

Lending- and equity-based platforms seem more suitable for established businesses raising money to grow, according to the NWBC research.<\/p>\n

6. Understand the fees.<\/strong>\u00a0Different crowdfunding platforms have different fee structures and you\u2019ll want to understand the charges before launching a campaign.<\/p>\n

Funding on Kickstarter, for example, is all-or-nothing. No one is charged for a pledge towards a project unless the project reaches its funding goal. If a project is successfully funded, Kickstarter charges a 5 percent fee to the funds collected, plus payment processing fees (roughly 3 to 5 percent).<\/p>\n

Indiegogo\u2019s platform fee on all funds raised is 5 percent. Fees are deducted from the funds you actually raise (not the goal you set). Indiegogo also charges a processing fee of 3 percent + $0.30 per transaction.<\/p>\n

iFundWomen takes a 5 percent fee on the funds you raise, \u201cbut you can feel good about that, because we pay forward 20 percent of our profits from standard fees directly into live campaigns on the site,\u201d according the website. In addition, credit card processors charge approximately 2.9 percent + $0.30 per transaction on this site.<\/p>\n

7. Get professional help<\/strong>. That\u2019s because \u201chow your crowdfunding page looks, how you tell your story and continually communicate on the page is essential,\u201d said De Carolis. \u201cYou don\u2019t want to put up a sloppy site\u2026 It\u2019s a PR campaign as much as a fundraising one.\u201d<\/p>\n

Generally speaking, you need a video of 2 \u00bd minutes or less.\u00a0 \u201cAnd I wouldn\u2019t take it with your iPhone,\u201d advised De Carolis. You can pay iFundWomen, for example, around $1,800 to put together a pitch\u00a0video<\/a>.<\/p>\n

8. Don\u2019t count on crowdfunding as be the only way to raise funds.<\/strong>\u00a0Said De Carolis: \u201cIt\u2019s a mistake to think \u2018I am going to crowdfund and then I am going to be able to have all I need to move my venture forward.\u2019 Quite honestly, at early stages, you need to use lots of other tools. You need to have family and friends investing. You need to have angel investors. You need credit cards. Entrepreneurs put a lot on credit cards, and that is not necessarily a bad thing, if you go about it strategically.\u201d<\/p>\n

Part of the\u00a0AMERICA\u2019S ENTREPRENEURS SPECIAL REPORT<\/a><\/p>\n

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By\u00a0Kerry Hannon\u00a0<\/a><\/span>Entrepreneurship and Personal Finance Expert<\/span><\/p>\n<\/div>\n

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Kerry Hannon has covered personal finance, retirement and careers for The New York Times, Forbes, Money, U.S. News & World Report and USA Today, among other publications. She is the author of a dozen books including\u00a0Money Confidence: Really Smart Financial Moves for Newly Single Women<\/em><\/a>,\u00a0\u00a0Great Jobs for Everyone 50+: Finding Work That Keeps You Happy<\/em>\u00a0and Healthy…and Pays the Bills<\/em><\/a>,\u00a0Getting the Job You Want After 50<\/a>,<\/em>\u00a0Love Your Job: The New Rules for Career Happiness\u00a0<\/a><\/em>and\u00a0What’s Next? Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond<\/em><\/a>. Her website is\u00a0kerryhannon.com<\/a>. Follow her on Twitter\u00a0@kerryhannon<\/a>.<\/div>\n<\/div>\n<\/div>\n

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