Press Room

11/11/2015

EquityNet Featured In The Business Woman Media

Below is an article by The Business Woman Media entitled "How Crowdfunding Levels the Field for Female Entrepreneurs"

How Crowdfunding Levels the Field for Female Entrepreneurs
By Amanda Rose, The Business Woman Media
November 11, 2015

If you take a look at the founders or board of directors for many VC funded small and startup businesses, you’re likely to find that the majority of the faces are male. It isn’t a coincidence that, historically, businesses run by women have received less funding than ones run by men — which makes it harder for women-run companies to get off the ground in the first place.  An Inc.com article in 2014 noted that between 2011 and 2013, only 2.7 per cent of small businesses that received venture funding were run by women. It’s already tough enough to pitch a business to venture capitalists or angel investors — it appears to be even more difficult if you’re a woman.

Enter crowdfunding. The newest way to raise money for a small business venture — online, via backers from around the world — is actually turning out to be a far more effective means for female entrepreneurs to get funding. But is this trend likely to continue, and how can female entrepreneurs use crowdfunding to make their business a reality? Let’s take a look at where the gender gap started, how the change is happening, and how savvy businesswomen can level the playing field.

Gender Funding Divide

We’ve come a long way from the days when women were only seen in the workplace as secretaries or receptionists.  Today, women hold high-powered executive positions in professional careers at some of the largest companies in the world. But, many of them didn’t get there without a fight against a subconscious gender bias that tends to favor men in positions of power when it comes to business. And when it comes to female entrepreneurs that are looking to get a new product or idea off the ground, it can be even harder to break the glass ceiling  — or even to get venture capitalists to pay attention.

A Fast Company article explains the issue at stake:

“Even though one in five firms in the country with revenue over $1 million is woman-owned, the U.S. Senate Committee on Small Business and Entrepreneurship found that female entrepreneurs receive fewer loans or get less favorable terms than men. An MIT study found that when women pitched investors for funding, they were less likely to score than a man delivering the exact same pitch.”

It’s unfortunate to see that inherent sexism still exists in the business world, yet it’s something that female entrepreneurs know far too well. With less funding for women-run small businesses comes a lack of innovative ideas and potentially life-changing inventions, particularly when it comes to products that women themselves see a need for. Additionally, the fact that there are fewer women involved in successful businesses can discourage other women from attempting to fund their ideas, since it starts to look impossible. The gender gap stymies everyone involved, and everyone loses out as a result.

A shift in thinking

The good news is that female entrepreneurs have begun to see a subtle shift in their favor when it comes to raising funds. Since the rise of crowdfunding platforms like Kickstarter, CircleUp, and Indiegogo, it’s becoming apparent that women have a particular knack for presenting compelling pitches online. In the article from Fast Company, Bonnie Marcus, the author of The Politics Of Promotion, says that “it is easier for venture capital firms to focus on the risk benefit calculation of the deal rather than the gender dynamics that might occur when a woman is pitching them face to face.” It’s this unconscious bias that she believes is at the root of why women have difficulty securing funding through traditional VC pitching, and it appears that crowdfunding diffuses this bias. This is potentially a breakthrough for smashing the glass ceiling!

Indeed, the Fast Company article goes on to note that “…[b]y posting pitches for their projects to online platforms such as Kickstarter and Indiegogo, female founders were more likely to secure funding, researchers from NYU and Wharton discovered. Women-only teams had a 40% better chance of meeting fundraising goals. In tech, the success rate for women-led Kickstarter projects was 65% as opposed to just 35% for men.” These are some astounding numbers that point towards a much brighter future for female entrepreneurs.

How female entrepreneurs can find funding

If you’re a woman with a great idea for a startup company, the time is definitely right for you to be looking into online crowdfunding in order to raise funds. Keep in mind that creating something like a Kickstarter or EquityNet profile should be considered a serious business decision, particularly if you’re aiming to make it the main source of your initial funding. The Inc.com article recommends that the different crowdfunding websites all be researched very closely in order to find the one that best suits your business.