Woman entrepreneurs spark new approaches to funding
Two recent posts on the excellent Locavesting website zeroed in on the challenges and opportunities facing women entrepreneurs. The first looks at numbers suggesting that traditional channels of investment capital may be harder for women-led companies to access, due to a mis-match in goals and too much focus on fairy-tale Silicon Valley style venture capital channels. Author Jenny Kassen sees that women-led companies are more apt to be mission-driven, and suggests that they will benefit from pursuing sources of capital that are not so focused on making quick or exponential returns. This dovetails well with the second article, which summarizes a recent report, Stand out in the Crowd: How Women (and Men) Benefit from Equity Crowdfunding: “Women are achieving a higher success rate raising investment capital online than they are through traditional offline channels: 24% for online compared to 19% for offline.” Still, far fewer women-led companies even seek outside funding—and this represents a huge opportunity for those that pursue these channels. We highly recommend both articles for anyone who’s gearing up to raise funds for their business; keep reading for a few key quotes to whet your appetite.
From If Startup Funding is so Plentiful, Why Are Many Women Entrepreneurs Still Struggling?, by Jenny Kassen:
Women entrepreneurs, do any of the following comments sound familiar?
“I’m having lots of conversations and none of them are going anywhere.”
“I had an investor commit but now he won’t answer my phone calls.”
“I got sexually harassed when I pitched the first time.”
“An investor asked if I was truly committed to the business given my family obligations.”
“I had a couple meetings with funders who really didn’t seem to understand the product, or they wanted the product to be something else.”
If so, you’re not alone. For all the talk that startup funding is plentiful, many entrepreneurs are struggling to find investors. Women, especially, are spinning their wheels in meetings with investors that don’t yield results. This takes time away from running the business, not to mention their other priorities, and can lead to a downward spiral of lost confidence.
How to counter these trends? Here are some solutions:
Broaden your definition of potential investors. Your potential investors could include your customers, suppliers, neighbors, members of organizations that are in alignment with your company’s goals, etc. In my experience, non-professional investors are satisfied with more reasonable terms and are less likely to demand control. Identify investors that love what you are doing, totally get it, and want to be a part of it. You will have a much more pleasant relationship with them than you would with a professional investor that only cares about maximizing financial returns at any cost.
(much more at link above)
And from Women Entrepreneurs Are Making Strides With “Equity” Crowdfunding, by Amy Cortese:
The findings are good news for women entrepreneurs. Despite creating companies and jobs at an impressive pace— and delivering a higher return on investment than their male peers—they are held back by a lack of capital. Women entrepreneurs tend to raise less money than men, partly because venture capital remains a clubby, male-dominated world. In fact, they are 50% less likely to seek outside funding.
“Crowdfunding, specifically equity crowdfunding, is leveling the playing field for female founders with skills, ability and ambition to scale companies, who might have previously encountered pushback and closed doors from the traditional boys’ club of VC firms,” said Geri Stengel, founder of Ventureneer and the author of the report. Fittingly, she raised partial funding for the research on PlumAlley, a rewards-based crowdfunding site for women.
The findings bolster a growing body of data that show women have been successful with rewards-based crowdfunding, where backers contribute money in return for rewards but no financial stake. For example, on Kickstarter, the popular rewards-based crowdfunding site, women are 13% more likely to meet their goals than men—even for technology projects. They do even better on Indiegogo, where women are 61% more likely than men to meet their goals. . . . (And there are signs this success extends to equity fundraising, as) CircleUp, an equity crowdfunding platform that targets emerging consumer brands, reports that women-led businesses closed their rounds successfully at a 21% higher rate than men on the platform.