Research continues to show access to finance is an enduring challenge for women business owners.
Women-owned businesses are often under-capitalised compared to their male peers and all-female founder teams receive as little as 2% of equity investment, significantly less than their male equivalents.
A new form of funding – crowdfunding – has emerged as a crucial driving force behind countless entrepreneurial dreams, overcoming many of the problems associated with access to finance for founders. Founders can use crowdfunding to raise finance from friends, family and their networks without taking on debt or releasing equity in the early stages of their business, giving them space and time to create a trading track record, evidence product-market fit and the growing value of the business itself.
But what’s really interesting about crowdfunding is that women are excelling in this field and garnering substantial support from their fellow women. Research shows that in the UK women-led campaigns are 32% more successful than those that are male-led, and in the USA women-led projects have a 20% higher chance of being fully funded.
Women are more generous too – the average donation/pledge is 5% more for women-led campaigns than male-led ones – and women backers are more inclined to contribute to campaigns led by other women, with research showing that 72% of women prefer supporting women-owned campaigns.
So, what are some of the reasons behind why women do so well in crowdfunding?
- When launching crowdfunding campaigns, storytelling plays a key role in drawing in potential supporters with engaging stories. Research shows that women excel in this area as we have a knack for creating effective narratives that resonate strongly with our target audience.
- Women often have strong social networks, both online and offline, and we leverage these networks to get support for our campaigns. Women-led crowdfunding campaigns receive more contributions from their networks compared to men, thanks to our close bonds and effective outreach.
- There is a deep sense of empathy and shared experiences amongst women. Women-owned projects resonate with female backers as they can deeply relate to a variety of challenges a founder may be facing in both life and work.
- Women bring unique and diverse perspectives to the table – women entrepreneurs are more attuned to addressing problems and needs that are often overlooked by male entrepreneurs. We intuitively understand why a particular product or service that meets our needs as a woman will work because we also need or want it!
- As women we understand the importance of supporting each other in a world where we have historically faced disadvantages. Crowdfunding is seen as a means to empower and uplift our peers – many women are motivated to support others and pay it forward. Purchasing rewards and/or donating to women’s crowdfunding campaigns is a simple and effective way of supporting other women to realise their business aspirations.
- And finally, women are perceived as trustworthy and reliable. Research shows that women-led crowdfunding campaigns are more likely to inspire trust among backers, which is crucial for attracting financial support. This is partly because at the early stages of a start-up trust and authenticity are more important than competence in business (business skills will build over time). Crowdfunding allows women to let these wonderful values shine through.
Put simply, the success of women in crowdfunding comes down to the power of “Women Backing Women”, based on principals of mutual trust and understanding, and driven by our unique perspectives, compelling stories, and unwavering support networks.
So, let’s all work together to empower and support our amazing Scottish women entrepreneurs in their crowdfunding journeys. Together we can make a massive difference, together we can transform our business landscape, together we can leave a legacy for generations to come…one small crowdfunding donation at a time.
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