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Why Online Funding Is Perfect For Female Entrepreneurs

Female-led businesses are outperforming their male counterparts in crowdfunding campaigns. Why is online so suited to women entrepreneurs?

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Female-led businesses are outperforming their male counterparts in crowdfunding campaigns. Why is online so suited to women entrepreneurs?

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Why Online Funding Is Perfect For Female Entrepreneurs

Female-led businesses are outperforming their male counterparts in crowdfunding campaigns. Why is online so suited to women entrepreneurs?

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It’s a well-known fact that women own or run a small proportion of British businesses, but the importance of female entrepreneurship is sometimes be overlooked. The reality is that women often find themselves unable to access traditional forms of finance, and as a result many brilliant ideas never evolve into more than ideas, simply because they are refused the necessary capital.

Although a recent study from Babson College demonstrates that venture-backed companies led by women earn 12% more revenue than male-led companies, but that from 2011 to 2013 only 2.7% of venture-backed companies had female CEOs. So despite the fact that companies run by women are more profitable, there are not nearly enough women in those positions.

Having started my own business, I am all-too familiar with the challenges of raising finance for a brand-new company. I did a lot of research, and found out that the traditional funding route wasn’t for me. It wasn’t just because of the nature of my company, but also because I was a young and inexperienced female entrepreneur which would mean that banks and VC firms would likely turn me down.

Open platforms like Indiegogo have completely removed the gatekeepers to traditional finance methods that usually keep women and other under-represented groups from receiving funding. Instead, the crowd decides which ideas deserve to become a reality.

banker

Increasingly it is the public, not bankers, deciding who gets funding

If the crowd likes and believes in a project they will fund it, regardless of the gender, ethnicity or religion of the entrepreneur behind it. We’ve seen women be incredibly successful in crowdfunding. Around 47% of the campaigns on our platform that reach their funding goals are run by woman, which is nearly four times higher than the number of female-owned businesses that receive venture capital funding.

A recent study by UC Berkeley Haas School of Business discovered that the reason that women outperforming men boils down to the type of language they use on their campaign pages. Women use more positive, inclusive language, which makes backers feel like an important part of the project, and thus more likely to contribute.

These findings are underscored by research from Laura Nelson of Northwestern University’s Kellogg School of Management highlights in her paper “The Narrative Advantage: Gender and the Language of Crowdfunding.” She explains that crowdfunding relies heavily on the written word, which makes language more important than many of the unconscious biases that come into play in other business pitches.

With this in mind, my advice to female entrepreneurs looking into crowdfunding route is that they develop a compelling story, carefully selecting the language they use in their pitches. But there are many other crucial pieces of a successful campaign that cannot be disregarded:

• Research and planning – Look at successful and non-successful campaigns to see what has worked and what hasn’t. The more prepared you are, the more likely it is that your campaign will be successful. Your campaign needs to be planned from day one, and timing is incredibly important.

For instance, make sure you choose a starting date at the beginning of the week, and choose an end date on a work day.

• Get your video right – the best videos run 2-3 minutes in length and catch the viewer’s attention from the first second. Save most of the technical talk for the copy on your campaign page. From our experience at Indiegogo, we’ve found that on average campaigns that have a video raise 370% more than campaigns without one.

Keep it as short as possible focus on why this project is important to you. People fund people not projects.

Brad Pitt

The better your film, the greater chance you'll get funding

• Perks – campaigns that offer perks raise 143% more money than those that don’t – they have the power to make or break a campaign,and the most common advice from experienced campaigners is to make sure your perks strategy is airtight.

Perks are offered in exchange for donations, and the many variables at play (fulfilment, shipping, and feasibility) are complex and require careful consideration. Around 70% of successful campaigns offer between five nd severn perks.

A campaign should start with a solid five to seve, and add more throughout the campaign. Featured perks and limited edition perks are a great way to keep up the momentum of your campaign. Although £25 perks are the most frequently claimed, funders appreciate a variety of perk options. The trick is to make each distinctly different from the others.

• Communicate with your backers - campaigns that post three or more updates raise on average 531% more than campaigns with two or fewer updates. The people who have contributed to your campaign want to know how you’re using the funds and where you are in the process. Even if you experience a setback, be transparent with your backers.

The fact that woman are outperforming men in crowdfunding campaigns reveal that there is a world of untapped opportunity out there for female entrepreneurs, and we should be actively encouraging women to take the plunge and develop their amazing ideas.

Looking at our own founder, Danae Ringelmann, but also at the founders of some of our most successful crowdfunding campaign founders such as Jibo, Axent Wear or Malala Yousufzai, women are without a doubt worth investing in.

The more role models we have that prove that women are just as successful, if not more, than men are, the easier it will be to remove bias from the funding equation.

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Why Online Funding Is Perfect For Female Entrepreneurs

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