Why Women Entrepreneurs Have Greater Success With Crowdfunding
One very big hurdle faced by woman entrepreneurs with ideas, is accessing adequate start-up capital. Women face too many disadvantages from the industry of venture capital, mainly as the ecosystem remains skewed towards favoring men because of the solid existence of men’s clubs and power groups. For women qualified in technology, the challenge is evident in the everyday and regular workplaces. A survey by Elephant in the Valley conducted with 200 women, who had a minimum of 10 years’ worth of professional experience in technology, reported 67% feeling left out and shunned from networking or social opportunities due to their gender, rendering a majority of the work culture and environment, hostile towards its women workforce.
Surprisingly, women found crowdsourcing as a promising and refreshing avenue of expanding their narratives while pitching ideas, which may go beyond the immediate work network. Crowdsourcing enables considerable traction, delivering an important platform for women empowerment by preventing indecent harassment and promoting projects, which preserve culture. Crowdsourcing thus emerges as a platform that is women-friendly. The National Women’s Business Council has released a paper on how women entrepreneurs can use crowdfunding as a source of capital, based on original and exclusive data made available by two of the biggest crowdsourcing platforms, Kiva and Kickstarter. The aim was to assess various success predictors on crowdsourcing websites/platforms for business owners who were women and study if success predictors differed from that of their male contemporaries.
Social Network Platforms and Unequal Effectiveness
A woman’s unique network could possibly play a positive and important role by offering avenues and means to meet unmet capital need on Kiva or Kickstarter, although these may be differences. For the website Kiva, a social network solely for women experiences a greater predictor of success while it offers very little margin for women. Through the study, it was found that there was only a 0.2% increase in chances of succeeding even if there was a 10% hike in the number of ‘likes’ on Facebook.
On the Kickstarter, social networks ensured substantial impact, irrespective of gender. The study showed that a 10% increase in number of shares on Facebook enhanced increase in success rates by 7.8%. Further, the median campaign with a good video presentation enhanced success rates by 12% and generally, campaigns, which offered limited rewards increased their success rates by 3% as compared to campaigns which did not offer any rewards. An impressive head start with promotional activities ensured increased success rates for the women while including video pitches and rewards for capital, contributed to better success. As women’s business networks limited their capital access capabilities, social media networking could play a massive corrective role.
Realistic Goals Contribute to Success
Kickstarter is based on rewards, AON (which stands for all or nothing) platform with backers receiving rewards linked to the duration and size of contributions enabling creative ideas and startups to thrive with this platform. But the principle campaigner does not get to see any money unless fund targets are met. Kiva uses a peer-to-peer credit lending model, but as Kiva is registered as a non-profit organization, the lenders can access their contributed pool, without any interest. Kiva is also based on the AON principle with a relatively higher rate of attaining success for those businesses, which are already well established.
The emphasis is on the fact that individuals should have realistic goals in these AON platforms which should necessarily coincide with their network. For an individual with a relatively small network, any goal exceeding $6,000 may be unrealistic. For pursuing a goal of more than $6,000, prior to the campaign launch, they must build up and expand the size of their social network and continue leveraging through those networks as long as the campaign is live. The average goal regarding capital funding on Kickstarter is about $20,000 which is achievable due to the higher requirement of funds for innovative ideas and start ups. The average capital goal on Kiva was around $5,000, as most funding requests were put forth by established businesses.
Don’t Set Very Low Goals
Both platforms witnessed lower capital funding goals from women entrepreneurs than it did from male business owners/representatives. On Kickstarter, the average funding goal for women was only $14,552 for every campaign, while for men, the funding target averaged $20,282. Possibly this difference indicates the aversion to risky financial decisions by women entrepreneurs. The funding gender disparity is further heightened when the premiums (any amount exceeding the target amount) are also accounted for. On Kickstarter, the average premium which were raised by men almost exceeded twice those raised by the women (65% vs. 132%). This has an impactful negative effect on a business’ capital needs, as women tend to set lower targets right on the onset.
Leveraging Personal Stories on these Crowdsourcing Platforms
The study reviewed video campaigns in terms of their, length and presence or absence of it and it’s textual pitch. Results indicated that personal stories remain an effective help in meeting crowdfunding goals. Adding rewards for lending, in addition to a video pitch, contributed to greater success on Kickstarter. Women focused on detailed personal narratives on the Kiva platform to build a strong network for leverage, due to the platform’s philanthropic nature.
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