Looking at the participation by and opportunities for women in Crowdfunding.
By Amy Dunn Moscoso –
Take a look at the world of high tech entrepreneurs. Only about 10% of startup founders are women, according to Compass, a startup research firm. Furthermore, only 5% of IT investment goes to firms founded by women, according to PitchBook, another research firm.
Recently though, women have rattled the old boys’ club and smashed through some significant glass ceilings.
- Marissa Mayer, pregnant, becomes CEO of Yahoo
- Janet Yellen is named Federal Reserve Chair by President Obama
- Millennial woman, from 18 to 24, close the income gap for the first time in a decade, earning 93 cents for every dollar made by a man. (In 2012, women’s hourly wages were just 84% of what men made according to a national study on work by the Pew Research Center.
- Female angel investing rises nearly 10% in one year to 21.8% in 2012, up from 12.2% in 2011, according to the annual report of the Center for Venture Research at the University of New Hampshire.
These are significant strides, yes. But what about the future?
Millennial women are pessimistic. In spite of Marissa Mayer, young women fear the effects that motherhood will have on their earnings. With 54% of millennials wanting to start a business, where will the money for women come from?
Crowdfunding: A viable fundraising platform for women?
In June 2012, musician and artist Amanda Palmer went on Kickstarter, a website that helps people raise money for creative projects. Amanda asked for $100,000 to fund an album and a tour. Instead, she raised 1.2 million with pledges from 24, 883 people. This money empowered Amanda and her band, The Grand Theft Orchestra, to do a book, an album and a world tour.
Kickstarter is one of the most well-known crowdfunding sites. Crowdfunding involves using a platform to raise funds for a project, business or cause. Instead of asking for a large amount of money from a bank or investors, founders ask for small amounts of money from a large pool of investors or donors on the Internet.
Currently, there are hundreds of crowdfunding sites. New niche platforms are popping up everywhere to raise funds for movies, start-ups and causes.
Several of these sites are led by women.
Top crowdfunding sites with female leaders
Crowdfunding has several women leaders who are founders, executives or both.
- Indiegogo. One the most popular sites, Indiegogo was founded at the Sundance festival to finance independent films. It now covers many categories. Danae Ringelmann was one of three founding members who launched the site in 2007. Today, she is the Chief Customer Officer. Indiegogo claims that 42% of funded campaigns are led by women. [https://blog.indiegogo.com/2010/12/indiegogo-vs-venture-capital-women-34-more-successful.html]
- Plum Alley. Deborah Jackson is Founder and CEO. She added crowdfunding to her e-commerce site in 2013. The site focuses solely on products developed by women.
- Crowdfunder. Rita Ravindra is the Chief Operations Officer here. This site serves small businesses, start-ups and social enterprises.
While other crowdfunding sites have women at the helm, a look through executive teams of several top sites, including Kickstarter, shows that many are still 100% founded, led and managed by men.
Best and worst crowdfunding categories for women:
In what crowdfunding categories do women do well? Kickstarter stats shed some insight.
With 13 categories, $958 million dollars raised and 55,486 funded projects, the category breakdowns still show that men and companies dominate both raising the greatest amount of money and in popularity.
Women perform differently, however, across categories.
- Publishing. This category has 15,786 projects, a 32% success rate and 36.66 million successfully raised. Two of the most funded and five of the most popular campaigns in this category are women led.
- Music. This one of the most popular categories on Kickstarter with 27, 100 projects and a 55% success rate. While Amanda Palmer’s project has raised the most funds, her campaign is the only women led campaign in the top 10 most funded projects. Two women led campaigns appear in the top 10 most popular.
- Film and Video. With 32,548 projects, a 40% success rate and 1.59 million successful dollars raised there are no women led campaigns in the top 10 most funded or most popular.
- Technology. At 3,599 projects, a 35% success rate, 95 million successful dollars raised, the top 10 most funded campaigns are led by eight companies and two men.
For all campaigns, companies dominate the top 10 projects for funding, along with two men. Only one women led campaign appears in the top 10 for popularity. Hello Ruby is led by Linda Liukas and falls under the publishing category.
Female Factors in Crowdfunding Success
While women might not be raising the greatest amounts of money, or be leading the most popular campaigns, they are experiencing greater success than men on Indiegogo.
Indiegogo’s blog documents female success. Women led campaigns:
- Get 1.3 more contributors than male led campaigns
- Raise an average at 10.75% more money
What kinds of advantages and skills equal success for women crowdfunders?
- Social Media Skills. Amanda Palmer’s savvy command of social media and her extremely loyal following helped drive mass support. With 74% of women active on social media, according to The Pew Research Center, women can reach a vast audience.
- Team Work. Indiegogo states on their website that those with “teams raise 80% more funds than those run by an individual”. Creative projects benefit from a team that works collaboratively, a style employed by women [http://www.magazine.utoronto.ca/leading-edge/teamwork-men-vs-women-jennifer-berdahl-cameron-anderson/], according to a study from the University of Toronto.
- Networking. Women are good at forming relationships. A forthcoming book called Business Networking and Sex [http://www.amazon.com/Business-Networking-Sex-Ivan-Misner/dp/1599184249] states that women use networking to build relationships. That tends to translate on crowdfunding sites.
“Get started as early as you can, and don’t try to boil the entire ocean at once. Many people get paralysis from analysis, where they design their perfect business plan, or their perfect non-profit, or their perfect album, and when this analysis keeps you from taking action, that’s no good.” – Danae Ringlemann, Founder, Indiegogo (Source: Financial Post – Indiegogo founder advises startups not to wait for perfect)
What holds women back from raising funds?
While there are many reasons that women tend not to make as much money as men, it’s often touted that women negotiate less than men do. In crowdfunding, not asking for large amounts of money, or for enough funding, may lead women to raise fewer funds than men.
Is crowdfunding a democratizing force in funding for women?
What it may democratize is who gets to invest.
That may be the truly democratizing force. When women invest in women, money equality may follow.
What do you think? Share your opinion. Is crowdfunding the best way for women to raise money?
“Most ideas in the world are funded because they have the ability to make someone else’s money. That’s what investment is, what lending is,” the co-founder of Kickstarter, Yancey Strickler said. “Ninety-nine percent of ideas have no ambition to create money whatsoever. The extent of the dream is, ‘I wanna make this.’ ”
– Yancey Strickler, Kickstarter (Source: The Wrap – Kickstarter Co-Founder Yancey Strickler: ‘We Don’t Care About Money’)
Preview Photo: Danae Ringelmann, co-founder of Indiegogo with Sommer Peterson and Molly Bradshaw, crowd funders @Mission Bowling Club. Credit: Lance Iversen, The Chronicle via SFgate.