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women give, women money, women charity, women entrepreneur

Key crowdfunding strategies for women entrepreneurs to raise more money

June 1, 2022/0 Comments/in Featured, Investing in your business, Microfunding, Money /by Victoria Arena

Ramy Elitzur, Associate Professor of Financial Analysis at University of Toronto, shares how women-led businesses can use crowdfunding to launch their startups. 

For a new venture to get off the ground, entrepreneurs require resources and support that greatly enhance the likelihood of its success. Unfortunately, there is still a gender gap in entrepreneurship that means women don’t get the same access to those resources.

In fact, while women make up 51 per cent of the global workforce, their representation as entrepreneurs, according to global crowdfunding statistics, is only 39.5 per cent.

To address this gap, entrepreneurship researcher Eliran Solodoha of Ben Gurion University and I conducted a study in which we analyzed 2,275 rewards-based crowdfunding projects to investigate the impact of the presence of women entrepreneurs and the effects of social validation on their fundraising efforts.

Social validation is a psychological phenomenon in which passive people follow or conform to the actions of others within a group. For example, people are more likely to stop at restaurants with many cars parked outside than those with few cars. Extending this idea to crowdfunding, investors are more likely to commit funds to projects with large numbers of backers and shy away from those with few.

Startups are increasingly turning to crowdfunding to raise financing for their companies. In rewards-based crowdfunding, entrepreneurs seek financing from investors in return for a product or service.

women entrepreneur, entrepreneurship

Photo by Keren Levand on Unsplash

Social validation, crowdfunding success

Social validation is powerful and provides insights into the every-day behaviour of people. For example, research shows that because of social validation, people will often pick an incorrect answer on a vision test — even whey though they know it’s wrong — to conform to the others who publicly picked it.

Additional research shows that participants who read a blog post with fake comments supporting a volunteer activity agree to volunteer for more hours than those who read the same blog with fictitious comments rejecting it.

In a similar manner, potential investors may consider a business venture more attractive when they see others reacting favourably to it.

One of the problems facing women entrepreneurs is that that the entrepreneur’s role is stereotypically viewed as masculine. Consequently, women-led firms face more financing barriers compared to those helmed by men. The question we focused on is whether social validation — specifically, the number of crowdfunding supporters — can reduce the gender gap as companies helmed by women try to raise funds.

We conducted our analysis using standard statistical methods as well as machine learning algorithms that provided a clearer picture of the behaviour of crowdfunding investors.

The importance of crowdfunding backers

Our results showed that, as expected, the fact that a company is led by a woman works against it when it comes to raising financing through crowdfunding. However, our results demonstrated that women-helmed companies can overcome this obstacle and obtain crowdfunding support using social validation.

In other words, if they attract supporters, they can obtain even more supporters. The practical implication is that female entrepreneurs should strive to generate initial support, for example, by raising as much financing as possible at first from their own networks.

social media

Photo by Georgia de Lotz on Unsplash

Another form of social validation involves the number of comments on a crowdfunding campaign, which can demonstrate the size and scope of an entrepreneur’s social networks — again a positive sign for potential investors.

Our machine learning algorithms also demonstrated that while social validation helps women entrepreneurs obtain financing, it peaks at a certain level. The results show that social validation will increase the probability of crowdfunding success by 14.5 per cent overall in combination with all other variables that include geographic location, the category the venture is in (health, music or food, for example) and prior entrepreneurial experience.

The lack of resources and support for women entrepreneurs lowers their chances of success, and ultimately leads to the under-representation of companies led by women. As we show in our study, this problem can be partially overcome in crowdfunding initiatives by socially validating female-led ventures.The Conversation

You might be interested: Why more minority founders aren’t backed by venture capital funding


Ramy Elitzur, Associate Professor, Financial Analysis, University of Toronto

This article is republished from The Conversation under a Creative Commons license. Read the original article.

https://latinasinbusiness.us/wp-content/uploads/2022/01/successful-beautiful-asian-business-woman-holding-money-us-dollar-bills-hand-business-concept-e1654096485873.jpg 429 800 Victoria Arena https://latinasinbusiness.us/wp-content/uploads/2020/11/LatinasInBiz_logo-300x91.png Victoria Arena2022-06-01 11:00:222022-06-01 11:15:47Key crowdfunding strategies for women entrepreneurs to raise more money
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Secrets to successful crowdfunding for your small business growth

July 22, 2015/0 Comments/in Featured, Investing in your business, Microfunding, Money /by Jesse Torres
Field of Dreams (Photo by Madmaxmarchhare of English Wikipedia)

Field of Dreams (Photo by Madmaxmarchhare of English Wikipedia)

 (Book excerpt)

Ray Kinsella, a character in the movie Field of Dreams, hears a voice in his cornfield tell him, “If you build it, he will come.” The voice was telling Ray to sacrifice his time and money to build a baseball field in his corn field. Ray listened to the voice and built the baseball field despite being on the brink of financial disaster.

The advice worked for Ray, resulting in the arrival of Shoeless Joe Jackson and a team of forgotten baseball players from a bygone era. Luckily for Ray, the ball players that appeared in his corn field provided Ray with an attraction that generated the revenues necessary to keep his farm and his home.

In the business of crowdfunding, however, there is no Field of Dreams. In fact, listening to this type of advice when orchestrating a crowdfunding raise is the worst possible advice an entrepreneur can accept. Just because you create a campaign does not guarantee that anyone will take part. In most launching a crowdfunding campaign without first setting up the proper foundation will result in a complete failure.

In our conversations with entrepreneurs we find that too many of them have bought into the crowdfunding hype and believe that their success in raising the money needed to launch their business is dependent merely on setting up a crowdfunding account, telling a good story and creating a good video. In too many entrepreneurs’ minds that is all that it takes to get the money to begin flowing.

Through our radio show and on our Two Men In Your Business YouTube channel we had the opportunity to meet and interview a great number of entrepreneurs that used crowdfunding in an attempt to launch their businesses. Some were successful, others were not. Regardless of the outcome, the great takeaway we have acquired has been that it takes a lot of work to successfully close a crowdfunding raise. In fact, through our observation and inquiry it seems that assuming the Field of Dreams philosophy is a sure way to ensure failure.

Crowdfunding requires to cultivate and direct investors to your campaign.

Crowdfunding requires to cultivate and direct investors to your campaign.

The biggest fallacy is the expectation that the crowdfunding platform will find your investors. While it is true that  platforms have accumulated large lists of investors with whom they communicate on an ongoing basis about new and relevant investments, the reality is that the number of crowdfunding campaigns launched daily is so large that it all becomes noise. Investors must generally believe in you personally or your product. Most investors are not sitting around with an itch in their pocket and the need to empty out their wallets.

While an occasional investor may materialize through the crowdfunding site, successful entrepreneurs find, cultivate and direct investors to their specific campaign. Expecting the platform to do the work for you turns your crowdfunding campaign into one more investment opportunity that gets missed or ignored.

Successful entrepreneurs let potential investors learn about the players and the product well before a single dollar is contributed. Successful crowdfunding campaigns have built relationships with potential funders many months before the campaign goes live. Creating a relationship with potential funders ensures investment and encourages funders to share their experience and your product within their social network.

This chapter is focused on providing you with the information needed to set a proper foundation well before going live with a crowdfunding campaign. This chapter will guide you through the steps you should take to ensure that you give your raise the best chance of success. While there are no guarantees or silver bullets in crowdfunding, there are certain practices that improve the odds of success.

SIGN UP TO GET NOTIFIED WHEN Two Men In Your Business Guide to Crowdfunding is released in July 2015!

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https://latinasinbusiness.us/wp-content/uploads/2015/07/Crowdfunding-money-growing1.jpg 450 675 Jesse Torres https://latinasinbusiness.us/wp-content/uploads/2020/11/LatinasInBiz_logo-300x91.png Jesse Torres2015-07-22 05:20:332015-08-28 08:25:30Secrets to successful crowdfunding for your small business growth
Jesse Torres and Aaron M. Sanchez Two Men in your Business

Crowdfunding using social media to fund your startup

May 29, 2015/0 Comments/in Featured, Investing in your business, Microfunding, Money /by Jesse Torres

crowdfunding money access to capital

Before crowdfunding became the ubiquitous start-up funding mechanism that it is today, most entrepreneurs were limited to reaching out to their friends and family when it came to raising money for a new venture or to grow an existing business. Thanks to the Internet, social media and the power and influence of the crowd, funding is more accessible to more people than at any time in the history of civilization. Welcome to the age of hyper-democratization of business creation.

SIGN UP TO GET NOTIFIED WHEN Two Men In Your Business Guide to Crowdfunding is released in July 2015!

When we hear the term crowdfunding we think about the Internet sensations that enabled needy but worthwhile causes to raise money in small amounts from numerous sources. These crowdfunding platforms are referred to as innovative, flexible and democratic and are viewed by many as a modern-day miracle made possible only as a result of the Internet and social media.

Today it is not possible to talk about entrepreneurship without talking about crowdfunding. Entrepreneurs have the ability to efficiently tap more financial resources than ever before thanks to crowdfunding platforms like Kickstarter and Indiegogo. By reaching out to the masses and asking each participant to provide a small contribution, entrepreneurs can achieve their capital raising goals like never before.

Supporting this notion and topping the list of the most successful crowdfunding projects ever is the Space Combat video game. The Space Combat campaign raised over $83 million from 898,000 supporters. Runner-up is the Pebble Time smart watch campaign which raised over $20 million. Admittedly, without the Internet and social media these crowdfunding feats would likely not have been achieved.

Jesse Torres and Aaron M. Sanchez Two Men in your Business

Jesse Torres and Aaron M. Sanchez Two Men in your Business

Is crowdfunding a new concept?

The reality, however, is that crowdfunding has been in existence for centuries and has likely existed going back to the earliest days of man. Crowdfunding raises have been referred to as “cundinas” in Mexico as far back as anyone we know can remember. And in nearly every corner of the planet there has historically been a form of crowdfunding used in times of need.

Imagine the farmer in the early days who was in need of tools to prepare his land for the planting of corn. Short on capital he spoke to members of the community, stating that without their support the town would go without corn – an essential staple. Through word-of-mouth and some hustling, the farmer raised the monies needed to purchase the tools needed to prepare the land and ensure corn for the coming season. Did the farmer raise $83 million? Not likely. But he collected what was needed and the community benefitted from its contribution.

Today’s crowdfunding efforts are no different. An entrepreneur in need of funding to launch a new company, product or service uses word-of-mouth via the Internet and social media. And like the farmer, the entrepreneur hustles to make sure that the message gets out loud, clear and into the ears of the right people. Ultimately, as will be described later in this book, a crowdfunding campaign succeeds if it results in benefit to the participants.

During a recent crowdfunding workshop we held in Los Angeles, an attendee raised the point that the only difference is that the farmer had to work a lot harder to get the money. I promptly laughed and noted that crowdfunding has never been harder. Crowdfunding is far from a sure thing. And contrary to popular belief, crowdfunding can be a bitch.

While the amount of crowdfunded dollars continues to grow, the number of start-ups and existing businesses seeking the crowd’s monies is growing at a faster rate. As a result the competition for dollars is intense and requires that entrepreneurs know exactly what they are doing before embarking on a crowdfunding expedition.

Find additional information in our upcoming crowdfunding guide

Two Men in Your Business Guide to Crowdfunding provides entrepreneurs with the roadmap needed to plan and execute a successful crowdfunding raise. This book shows entrepreneurs how to prepare for the raise, how to structure the raise, how to get the word out, how to keep the pressure on, how to use tools that work and what to do once the crowdfunding campaign is over.

Each chapter in this book addresses a different topic. The chapters do not need to be read in order – though we recommend it. Also, this book is concise and to the point. The goal is to provide the needed information in a manner that allows the entrepreneur to get to crowdfunding as quickly as possible.

We are confident that this book will provide amazing value. In exchange, we ask that you use the power of the Internet and social media to spread the word. Happy crowdfunding!

SIGN UP TO GET NOTIFIED WHEN Two Men In Your Business Guide to Crowdfunding is released in July 2015!

https://latinasinbusiness.us/wp-content/uploads/2015/05/jesse-torres-two-men-in-your-business.jpg 450 675 Jesse Torres https://latinasinbusiness.us/wp-content/uploads/2020/11/LatinasInBiz_logo-300x91.png Jesse Torres2015-05-29 09:37:412015-06-17 22:03:25Crowdfunding using social media to fund your startup
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