How crowdfunding evens the playing field for female entrepreneurs
Sites like Kickstarter and Indiegogo encourage more women to get funding for their business ideas.
The concept of crowdfunding has gotten a lot of publicity lately, and not just because Zach Braff used it to fund his latest movie or because some dude raised a boatload of money to make potato salad. Sites like Kickstarter and Indiegogo have become legitimate funding sources for entrepreneurs; by bringing their ideas straight to the public, they hope to skip the harrowing step of taking out a loan or trying to pitch their concept to a series of unsmiling venture capitalists.
A pleasantly unexpected side effect of the crowdfunding movement has been an increase in the number of women going into business. And this is isn't just anecdotal; the Hebrew University of Jerusalem conducted a study where they examined thousands of Kickstarter projects from April 2009 through March 2012, sorting both the entrepreneur and investor data by gender.
What they found was that, during that period, "women made up about 35 percent of the project leaders and 44 percent of the investors on the Kickstarter platform." Both percentages are significantly higher than the numbers of women seeking funding through more traditional methods. A similar study from NYU and Wharton corroborates this information.
Why does the existence of Kickstarter and its ilk attract more women? "It is all about networks and reaching out to your networks and that is what women do best," Karina Kallio, a Brooklyn-based business owner, told From The Grapevine. "They talk and share with their friends who in turn pass on the information to their friends. This is the community building that the crowd(funding) platforms encourage and enable, and that is what women do so well."
Kallio raised more than $30,000 to fund her first Kallio workSHOP, a studio and retail space in Williamsburg where, in the words of its Kickstarter page, "artists and designers will teach simple and sustainable design techniques – from urban gardening to re-imagining vintage to food styling and photography."
Crowdfunding sites work differently than traditional angel investing; the investors aren't taking equity in the company or asking for royalties, like you might see the panelists on "Shark Tank" asking for. The only return investors get on their money are certain rewards, that, in Kallio's case, ranged from their name on a "neighborhood wall" all the way up to the opportunity for a designer to use the space for a pop-up store. Kallio never looked to go the more traditional route, because "I do not want to be in debt at this beginning stage of business as it is too uncertain, and would make me lose sleep at night."
The Hebrew University study also found that not only are female-led projects better at reaching their crowdfunding goals than male-led projects, but that women are more inclined to invest in female-led projects than men are. When the researchers surveyed the male investors to see whether the reluctance is due to gender bias or simply the nature of the female-led projects, they found that "those male investors deemed to have a greater openness to gender equality were more likely to invest in female-led projects."
Supriya Hobbs would likely agree with that assessment. "In the world of entrepreneurship, walking into conversations with investors often means walking into a room full of men. Although this certainly does not eliminate the possibility of success for female entrepreneurs, it does add another obstacle to the process," she told From The Grapevine. Hobbs raised more than $88,000 via an Indiegogo campaign for her Miss Possible line of dolls, which depict successful women in science and technology throughout history, like Marie Curie and Bessie Coleman. The doll and accompanying educational app are designed to encourage girls to consider careers in the STEM fields.
"Crowdfunding lets women reach a broader audience and go directly to their consumers to confirm the need for their products," said Hobbs. "This is especially beneficial when their target demographics are not typically found among investors."
Whatever the makeup of the investors are, though, the engagement they're having with the entrepreneurs is encouraging to them. "We received lots of messages from people who wanted to tell us about the women who inspired them, and giving us feedback on our products," said Hobbs about her Miss Possible investors. "It was great to be able to interact with the community of our biggest supporters."
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