Women entrepreneurs have struggled to fund their ideas and businesses, receiving only 2.3% of venture capital investment. Women founders also receive smaller and less frequent loans from banks and only about 15% of government funding. This has resulted in women downplaying their gender to avoid being stereotyped and hurting their funding chances. FundingHope is bridging the gap between investors and women entrepreneurs.
While many lending and investment firms act like funding female founders is risky, the real risk is in leaving women behind. Enter debt and equity crowdfunding.
FundingHope, is creating a state-of-the-art crowdfunding portal that bridges the gap between investment in women owned businesses and measurable impact that transforms distressed and at-risk communities.
The FundingHope investment crowdfunding platform will allow entrepreneurs in distressed and at-risk communities to raise money from the public and will challenge many established investment patterns that have left women entrepreneurs behind.
Equity crowdfunding investors behave differently than traditional investors. There are fewer professional investors chasing financial returns on crowdfunding platforms, and crowdfunding investors typically are attracted to business sectors they are passionate about. Women entrepreneurs tend to gravitate toward business areas that connect people’s passions and will lead to greater crowdfunding success by women entrepreneurs.
A recent study of 3191 women-led online crowdfunding campaigns has shown that campaigns that were promoted as female-owned improved their funding results. The results also showed that a female-centric campaign resulted in more funds raised, self-promoting language hurt their businesses, women also did better in male-dominated sectors like high-tech businesses, and women entrepreneurs with bigger goals raised more money.
While men have long been the favored sex when it comes to entrepreneurship, this is due to outdated stereotypes of women lacking leadership skills, endurance, and more likely to prioritize personal/family life over work. Traditional investors who only look at these stereotypes have left female-led opportunities on the sidelines, resulting in women entrepreneurs getting less mentorship, funding approval, and less opportunity to grow their businesses and transform their communities.
In crowdfunding, and on the FundingHope crowdfunding portal, promoting campaigns as women-led might be an advantage. Equity and equality (UN Sustainable Development Goal #5) are a growing concern and interest in crowdfunding. Investors on crowdfunding platforms are more likely to be motivated by sustainability, impact investing, and social equity. Also of importance, women support other women because they recognize the struggles they have faced and the hurdles they have overcome. Men also support women to help level the playing field. When women founders tag themselves as “female founder” or with the hashtag #femalefounder, it encourages investors to support them and benefit their online crowdfunding efforts.
As we pointed out earlier, the efforts of women entrepreneurs have been damaged by harmful stereotypes. However, spotlighting female-led companies on crowdfunding platforms like FundingHope might help female entrepreneurs raise more money during their online campaign. Showcasing their personal experiences and connecting with other women brings an authentic message to their campaign. Authenticity is proven to signal legitimacy, which traditionally has been difficult for women to achieve. Accentuating the female perspective in crowdfunding campaigns can be seen as a pathway to attracting additional female support without turning off men.
Underrepresented groups are often viewed as being less competent, which results in additional discrimination. Groups of color and women, especially women of color, are often advised to avoid certain sectors (technology, finance, and construction). In investment crowdfunding, avoiding these sectors may not be necessary for women and other underrepresented groups. In fact, crowdfunding’s casual investors, being a woman or minority might make an entrepreneur more appealing and special. Being an entrepreneur needs courage, strength, resilience, and a genuine level of competency in the sector. Being an entrepreneur from an underrepresented group may inspire casual impact investors to support a campaign being led by a woman or minority.
While female entrepreneurs may be leaning to raise a smaller amount of capital, or request less in loans, large goals can signal a quality investment opportunity. Goals serve as “anchors” that investors use to establish early valuations. In equity crowdfunding campaigns, raising large amounts of money signals to investors that the project is of high quality, and this also attracts more interest.
Raise your goals and you have a better chance to raise more money and achieve more success!