Banking & Finance  September 5, 2014

Women have edge in crowdfunding success

Women entrepreneurs appear to be better at raising money for their startup companies using online crowdfunding sites than do their male counterparts.

A recent study conducted by researchers at Columbia and New York universities found that female entrepreneurs have greater success than do males in raising money online via crowdfunding campaigns such as KickStarter and Indiegogo.

The study evaluated more than 1,250 projects and concluded that women were 13 percent more likely to meet their funding goals than were men. 

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Of all of the factors that could be contributing to this phenomenon, Jason Greenberg of New York University, who co-wrote the analysis of the study, suggested that female entrepreneurs are more successful raising funds online because they secure support from “women who are activists who want to reach out and help other women.”

Turner

Lisa Turner, a chef and holistic nutritionist, raised money via Indiegogo to support Boulder-based Miri Organics Inc., a company she co-founded in 2012 that began producing the healthy snack Wholly Bites in 2013.

Women’s success at using crowdfunding, Turner believes, is that “women are more willing to ask family and friends for help, and they have a larger support network than men.” 

Iva Paleckova raised nearly $10,000 through an online crowdfunding campaign through Indiegogo, money that helped her open Blooming Beets Kitchen in Boulder in May.

Paleckova said she believes women are more successful at crowdfunding because they are “more risk averse. … Women tend to take on a project only after thinking they can succeed and then put the work in to make it happen,” she said. 

Paleckova said a crowdfunding campaign takes a lot of work.

“It’s really a full-time job,” she said. “You are constantly talking up the campaign, requesting that people tweet and retweet about the campaign, coming up with perks for donors. It never ends.

 “There’s a lot of buzz at the beginning of a campaign, but it can quickly die out, she said. “I recommend a 30-day campaign, focus on it and be done with it.”

Paleckova said crowdfunding represented a small percentage of what was needed to start her restaurant, but considers it a crucial part. “Without it, I couldn’t have opened the restaurant,” she said. “It was a good way for us to find supporters, get connected, get the word out.”

Turner agreed, adding that “it’s good publicity.” She said campaign donors that contributed $3,250, about 25 percent of her goal, were nationwide, from California to New York. “It’s a great way to get the word out on your product.”

Crowdfunding platforms, which came along in 2009, provide an alternative to the traditional one-on-one pitch to investors and venture capitalists. 

Online crowdfunding provides a forum to present ideas in a virtual world that can reach a much larger audience, which provides what Turner called another benefit of a crowdfunding campaign.

“These platforms tend to focus on nonprofits and companies that have a mission of social responsibility,” she said.

That is a good fit for Miri Organics, which produces whole unprocessed organic food, uses sustainable packaging and practices, and creates charitable partnerships.

Another study looking at the gender dynamics of Kickstarter concluded that women made up about 35 percent of the campaign project leaders and 44 percent of the investors on the platform.

On average, men seek significantly higher levels of capital than do women for their projects, and also raise more funds than women, according to the study, conducted by Social Science Research Network. However, it found that women enjoy higher rates of success in funding their projects.

Only about 23 percent of projects in which men invested had female project leads, according to the study. Conversely, more than 40 percent of projects in which women invested had female project leads. 

Ryan Stover, founder of CommunityFunded, a crowdfunding platform based in Fort Collins, said its platform is following the Kickstarter trend.

“It seems we have a few more female project creators/leads than male,” Stover said. “I can corroborate both that male project creators tend to ask for higher dollar amounts, and female project creators tend to get more support from female donors than male.”

Danae Ringelmann, founder of California-based Indiegogo, told P2B Investors that 47 percent of successfully funded campaigns on her site are run by women, compared with the 13 percent of female-led businesses that successfully obtain venture-capital funding, according the study by  Columbia and NYU. Stanford University research shows only about 5 percent of all venture-capital funding goes to women-run startups.

Doug Storum can be reached at 303-630-1959, 970-416-7369 or dstorum@bizwestmedia.com.

Women entrepreneurs appear to be better at raising money for their startup companies using online crowdfunding sites than do their male counterparts.

A recent study conducted by researchers at Columbia and New York universities found that female entrepreneurs have greater success than do males in raising money online via crowdfunding campaigns such as KickStarter and Indiegogo.

The study evaluated more than 1,250 projects and concluded that women were 13 percent more likely to meet their funding goals than were men. 

Of all of the factors that could be contributing to this phenomenon, Jason Greenberg of New York University, who…

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