You could be forgiven for thinking of crowdfunding as a relatively modern concept. In fact, its roots can be traced all the way back to a loan fund established in the 1700s by author and satirist Jonathan Swift, whose aim was to provide support for “poor industrious tradesmen” in Ireland.
But crowdfunding has come a long way during the past three centuries. The advent of the internet has given this practice a new lease of life, enabling entrepreneurs from every corner of the world to gain access to business funding by offering stock and incentives to investors.
At the same time, the rise of online crowdfunding has also served to democratise the realm of investment. It’s now easier than ever for anyone, regardless of their profession, qualifications or background, to provide financial backing for the ventures they deem the most promising. All that’s needed is the requisite capital.
In short, crowdfunding would most likely be barely recognisable to Swift and his peers in its present form, not least because it no longer applies solely to “tradesmen”. On the contrary, businesswomen have proven themselves just as capable as their male counterparts – if not even more adept – when it comes to raising capital through this medium.
Nevertheless, according to The Alison Rose Review of Female Entrepreneurship, research conducted on behalf of the UK government in 2019, start-up funding is seen as the number-one barrier by female non-entrepreneurs. Even more shocking is that, on average, women launch their businesses with 53 percent less capital than men.
While it is true that men, or at least male-run enterprises, continue to attract the lion’s share of start-up finance, this snapshot does not tell the whole story. A research paper published in Plos One in 2019 shows that crowdfunding campaigns spearheaded by women tend to outperform those led by men.
But does this mean that crowdfunding has succeeded in levelling the playing field for women entrepreneurs? Well, perhaps not completely, but things are certainly moving in the right direction.
The perfect match
Perhaps the most obvious advantage that crowdfunding offers businesswomen is the ability to gain a financial foothold without having to deal with outdated stereotypes or network within the traditionally male-dominated world of business investment.
This egalitarian environment certainly seems to be paying dividends, at least according to the numbers. A 2017 PwC study, which included more than 450,000 seed crowdfunding campaigns, found women were 32 percent more likely to achieve their goals than men.
And it’s not just crowdfunding that seems to be suiting women entrepreneurs. This relationship is mutually beneficial. In my experience, women bring a more determined, holistic approach to this field – perhaps due to the historic gender-based funding ‘fight’ that we have had to endure.
Generally speaking, I would argue we also have a deeper understanding of community building, not to mention the importance of raising awareness of our businesses within those communities. Again, I suspect this can be put down to the battles that our forebears have fought and won in the past, succeeding in securing validation for their business ideas despite the odds.
Top tips before you jump in
Despite the many advantages that crowdfunding offers to women in business, it can be all too easy to become overwhelmed with the level of choice, let alone the prospective investors in the marketplace.
Fortunately, there are a few simple tips I can share to ensure you give yourself the best possible chance of achieving your funding goals, and ensuring your venture is successful in the longer term.
My first tip is to avoid discounting anyone in your network when considering who might back you. One of the biggest challenges faced by entrepreneurs – especially when they’re just starting out – is a lack of confidence. Remember, it’s easy to underestimate just how much people are willing to help, and you never know what might interest them about your project. So be bold! The worst they can say is ‘no’.
Secondly, and I can’t stress this enough, be open and honest when detailing your strengths and weaknesses. Prospective crowdfunders are far more likely to have confidence in you and your project if they feel you are being fully transparent about what you are trying to achieve and, more importantly, the areas in which you need support. The most seasoned investors can spot marketing bluster a mile off, so don’t try to pull the wool over anyone’s eyes. When it comes to long-term support and brand loyalty, integrity is paramount.
Next, take stock of your options before you take the plunge. Many crowdfunding platforms provide extra support to female-founded businesses to help them succeed and grow. Crowdcube, for example, had 216 such projects as of 2019, and it certainly isn’t the only outfit going the extra mile to support entrepreneurial businesswomen. Bank of America has also created a database for female entrepreneurs in a bid to help them unlock capital.
Finally, take the time to suggest match-funding and collaborations with potential corporate partners and other businesses, and use PR and communications tools to promote your project. Adopting a strategic approach will help boost your third-party endorsements and increase the size of your audience, in turn, maximising the amount of funding you’re able to raise.
Ultimately, if your business fundamentals are sound and you follow these tried-and-tested practices, there’s every chance your business will be a success – regardless of your gender or background.