Why Crowdfunding is so Successful for Women Entrepreneurs
For many reasons, any entrepreneur should consider raising money through a rewards-based crowdfunding campaign on sites such as Indiegogo, Kickstarter and Plum Alley. However, the case is even more compelling for women.
Typically, women have a harder time raising capital ‒ whether equity or debt ‒ than their male counterparts. Not so for crowdfunding. Hebrew University found that female entrepreneurs are more likely to reach their funding goal than males raising money through crowdfunding. And the Berkeley-Haas School of Business and Kellogg School of Management found women tell more compelling stories (than men) by connecting at an emotional level. Based on interviews I’ve personally done on the topic, I’ll add my own observations about what it takes to crowdfund successfully.
- Persistence: People don’t just come to your page once you’ve posted it on a crowdfunding site. You have to drive people there. Erin Bagwell waged a relentless crowdfunding campaign in support of her movie, Dream, Girl, a documentary to inspire the next generation of women entrepreneurs. The campaign included social media (blogging, Twitter, Facebook and Instagram), phone calls, in-person networking events (she attended nearly 80!) and media outreach. Her personal passion for her project translated into a persistent pursuit to make it happen.
- Efficient management: Done right, a crowdfunding campaign is intense. It takes excellent project management skills. Shelley Prevost of Torch ran her campaign like an army general, developing an overall strategy but continually morphing her tactical plan based on what was working and what was not. This kind of agility and attention to details and data mark the most successful campaigns.
- Clear communication: Forget the techno babble and MBA speak. Whether it’s your video, email, search engine, social media ads, or online personality, clear communication is key. Use the language of your people for an authentic connection.
- Openness: Danielle Applestone of Other Machine Co. raised more than six times her $50,000 crowdfunding goal, which was great. The bad news: It took longer than she imagined to manufacture the CNC mills that were ordered. Backers may not be pleased when you deliver your product late, but when you’re upfront and keep them in loop on your progress as Applestone did, you’ll minimize anger and retain trust.
Women have these skills in spades, but they should also consider rewards-based crowdfunding for the same reasons men should.
- Debt- and equity-free money: You don’t need to pay interest or give up a piece of your company to crowdfund. Instead, you are pre-invoicing the production of your product, typically at a discount.
- Insight into the market: You’ll find out who your customers are and what features they want most. You can even test pricing.
- Validation: A successful crowdfunding campaign provides proof to future investors—and to yourself—that the market truly wants your product and is ready to pay for it.
- Customer engagement: Customers who purchase your product early on are more likely to forgive small imperfections. They are also more likely to talk up your product to others.
- Marketing: A crowdfunding campaign is really a marketing campaign. It gets your product out in the market and is also a great way to test your marketing message.
Crowdfunding takes time and money to be successful, but there is no other financing option in which women have a higher success rate than men. Is it the right fit for you?
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