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crowdfunding

How women-led companies can raise more money through crowdfunding

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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.

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.

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.

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Crowdfunding Master Salvador Briggman at 2019 Entrepreneur Empowerment Lunch in NJ

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Salvador Briggman is a blogger and entrepreneur, working to help people raise money and expand their businesses through crowdfunding avenues.

Through his various platforms such as his successful blog, CrowdCrux, his YouTube channel, podcast, books, and educational websites, Salvador has been able to teach creators and fellow entrepreneurs how to launch effective crowdfunding campaigns and attain success with their business ventures.

Salvador Briggman, Crowdfunding Master, published author, and influencer, will be presenting an exclusive workshop at 2019 Entrepreneur Empowerment Lunch in Jersey City on June 13

Register now to save your seat! https://www.2019-eel.com/

crowdfunding

Salvador Briggman, Crowdfunding Master, published author, and influencer

 

Taking a big leap

Salvador began his own entrepreneurial journey in 2012 while working on a logistic regression as part of a mini-eco thesis for his undergraduate degree. This project studied the different categories on the popular crowdfunding site, Kickstarter. His findings discovered that there was a remarkable difference in the launch strategies behind a creative project–such as film, theater, or dance–versus a physical product–such as games or technology. Salvador began sharing his findings from this project on his blog, CrowdCrux, and soon they caught on and his audience began to grow.

In 2014, Salvador was able to go full-time with his blog while also growing several other assets such as his sites KickstarterForum.org and CrowdfundingForum.com.

Passionate about crowdfunding, online businesses, and entrepreneurship, Salvador moved to New York City to continue his dream of expanding his business. In a YouTube video he shares the story of his first apartment in NYC and what life was like during that first year. While walking the same street he used to live on, Salvador reflects back on how he first came to NYC with only enough money to pay one month’s rent for a sublet in Harlem.

“I remember how my girlfriend at the time bought me a cake for my birthday. I was careful and make that cake last the entire week, because I couldn’t afford much food,” says Salvador. “I was living on the edge, but I was working hard and passionate about my dream.”

Now, a few years later, he is living in a great section of Williamsburg, Brooklyn and has recently moderated a crowdfunding panel in Harlem on the very same block he used to live.

“It just goes to show that with time, persistence, and hard work you can change your circumstances.”

Helping others achieve their crowdfunding goals
crowdfunding

Salvador Briggman will give an exclusive workshop on Crowdfunding at 2019 Entrepreneur Empowerment Lunch

Salvador has always been eager to achieve success because he wants to help improve the lives of others around the world. By pursuing his passion in online businesses and crowdfunding, Salvador has been able to build various tools for other entrepreneurs to utilize in to grow their own ventures.

“I want to help them achieve their goals as well,” says Salvador. “If I help enough people achieve their goals, then I will achieve mine.”

When asked about his biggest struggle he has faced so far, he did not mention his hard times in NYC or other obstacles with achieving success. Instead his biggest struggle was there were so many hopeful entrepreneurs failing with their crowdfunding campaigns and he did not know how to best help them at the time. This need to help others achieve their own dreams is what leads Salvador to further pursue his study of crowdfunding campaigns and online businesses.

Through his study he realized that often times failure was due to lack of good preparation and a thorough pre-launch before the crowdfunding campaign. Many crowdfunding creators are not marketing experts and so they often do not have the necessary tools or skill sets create successful campaigns. Salvador however has worked hard to provide those tools and guidance. Through high quality educational material and helping creators one-on-one, Salvador has been able to help improve success rates for entrepreneurs in their crowdfunding campaigns.

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How to achieve success according to Salvador Briggman
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Learn from the best and work with Salvador Briggman to achieve your funding goals!

Sharing some insights he has learned throughout the years, Salvador gives his own definition of success. “First you have to educate yourself. You have to learn from success stories and also failures. Become the sponge and seek out as much information as you can.”

Living by this advice, Salvador is always learning new skill sets such as video editing, podcasting, social media marketing, and more. This willingness to always continue learning and evolving oneself is crucial to success as adaptability is an important skill in the ever-evolving world of business.

Additionally, Salvador advises that to make the most out of your venture you must have a product or service that has demand and meets a need in the market. Once this is achieved then the real work toward marketing and selling that product or service can begin.

Salvador Briggman, Crowdfunding Master, published author, and influencer, will be presenting an exclusive workshop at 2019 Entrepreneur Empowerment Lunch in Jersey City on June 13

Register now to save your seat! https://www.2019-eel.com/

Lastly, Salvador says, “You have to be willing to be a creator or business owner and not a consumer.”

It’s hard to pull out of the consumer mindset. We’re all consumers and it’s much easier to be a consumer than a producer. To be a producer you have to think like one. “Be willing to invest in your business, cultivate talent, and always be focused on the experience you can deliver to your customers,” Salvador says.

In such a competitive world, leveraging ones skills and optimizing ones ability to finance their ventures is invaluable. Crowdfunding offers creators and entrepreneurs a great way to raise money for their projects, and by learning how to build successful campaigns one can guarantee their efforts will not go to waste.

Salvador’s extensive knowledge and research into crowdfunding and business building has been able to help hundreds of thousands of people across the globe and he hopes to continue achieving success by helping others achieve their own success.

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Secrets to successful crowdfunding for your small business growth

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

Crowdfunding using social media to fund your startup

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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.