How to do crowdfunding (and why women are good at it)

Entrepreneur

 

In this post-credit-crunch world, finding funding for your business startup can be a real challenge. However, online crowdfunding is now providing a serious alternative to traditional funding methods, and women are proving to be real crowdfunding crowd-pleasers, cornering the market with this 21st-century funding tool.

Finding funding

Certainly, a large hurdle to leap when flexing your entrepreneurial muscles is finding the funding you need, and this seems to have been a particular obstacle for female entrepreneurs. Although there are various financing options out there, recent research in the US reports that women launch businesses with 50% less capital than their male counterparts, and may use a narrower range of funding types.

However, the financing playing field could be set to level, as female entrepreneurs are now successfully tapping into the very modern funding method of online crowdfunding. In fact, the crowdfunding revolution could be racing to the rescue as female-led crowdfunding campaigns appear to achieve far greater success than those led by men. Indeed, one such crowdfunding platform, LEOcrowd, reports that 62% of successfully funded projects are female led.

Why women win

Although a relatively recent phenomenon, online crowdfunding now provides a viable alternative to traditional financing routes, with an estimated $34 billion raised in 2015. For those new to the concept of crowdfunding, the idea is that you write a pitch for your project, describing the reasons for investing, which is posted on the crowdfunding platform, designate rewards, or perks, for different levels of donation, set a target for the amount of funding you need and a timescale for achieving it, then launch your campaign to the crowd.

Interestingly, studies suggest that the success of female-led crowdfunding campaigns may be partly due to the language women use to present their projects. The age-old adage that women’s communication skills are stronger than men’s may sound insupportable, but seems to be proving true with today’s technology. According to a recent study, female entrepreneurs are more likely to use positive language which is more engaging, making people feel part of the project and more inclined to contribute. Furthermore, recent research also reports that women are more prone to back female-led projects, and are more likely to be investors on crowdfunding platforms.

It is also thought that women are better at promoting their projects, which includes using social media to get the word out. In fact, several recent studies suggest that women are more at home with using social media than men, which can give them a head start at promoting and publicising their crowdfunding campaigns.

Crowdfunding

Although this game-changing funding option may be new and unfamiliar to many, don’t let that put you off. If you need a few pointers on the Dos and Don’ts, LEOcrowd provides a unique eCourse to educate you on everything you ever needed to know about launching a successful crowdfunding project, but were afraid to ask!

Indeed, education is at the heart of this UK-based crowdfunding site, which was developed by Learning Enterprises Organisation Ltd [LEO]

One crowdfunding novice who took the plunge with LEOcrowd was Wendy Zhou who successfully raised £7,573 to fund her project, The Power of You necklace. Wendy said: “After I learned more about crowdfunding, I understood that if you start your business with crowdfunding you minimise any risk; you don’t have to invest any start-up capital, only your time and your idea … A lot of women are very talented, they may wish to have a business but sometimes have to stay home to take care of family, or they don’t have the start-up capital. Crowdfunding allows them to launch their business anywhere as long as they have the Internet.”

Strategies for success

Sophia Lourenco, crowdfunding expert at LEOcrowd, has these top tips for those thinking of launching their own crowdfunding campaign:

Plan your project – Don’t let your project be half-baked, plan ahead. Before launching your campaign, research previous successful projects, to see what works and also look at unsuccessful campaigns, to learn where they may have fallen down.

Be positive and persuasiveYour project pitch is your business plan, so be persuasive. Choose your words carefully, using positive language to appeal to potential backers. Telling a good story is all-important!

People fund people – Show potential backers the people behind the campaign. If you are passionate about your project, let them know. One way to do this is to create a compelling video. Campaigns with a good video tend to raise more than those without. However, keep it short, around two minutes, and attention grabbing.

 Perfect perks – Offer good rewards – this is vital! Providing a variety of perks tends to prove popular – perhaps up to seven tiers of rewards, depending on the level of donation. When deciding what rewards to offer, just think what would appeal to you.

Promotion – Promote your project like crazy! Don’t wait until your crowdfunding campaign launches, drum up support in advance. Speak to as many people as possible and make good use of social media. Host events and keep backers informed – post updates, perhaps three to five, as campaigns with several updates tend to be more successful.

Clearly, the tools at our disposal today to successfully launch a business, such as crowdfunding and social media, surpass anything available to the entrepreneur of the past. However, it takes a ‘switched-on’ person to put these to good use and women are now leading the way!

*This article was written by Lindsay Harriss of LEO, a global entrepreneurship training company. With over 200,000 members, LEO also provides a ready-made worldwide audience of entrepreneurs and LEOcrowd facilitates payment via digital currency, such as Bitcoin or LEOcoin, offering different ways of backing from international sources.





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