Just over 30 years ago, back in the not-so-olden days, women couldn’t even get bank loans without having a male co-signer. Yup, that’s right. Talk about a barrier to access to capital! So, here we are in 2018, having come quite a long way - with over 1,800 new businesses being started by female entrepreneurs every day.
That’s immense progress, yet somehow traditional funding options remain out of reach for most women in business - with female-led firms still receiving a single-digit fraction of the only 1% of venture dollars made available to all startup founders. So, how do you - a lady with a great idea, a ready-to-launch startup, an established business, or even a monetizable side hustle - get that money, honey? You crowdfund.
Breaking news: Rewards-based crowdfunding platforms like iFundWomen are a legitimate funding option for your business. Why? Because it is THE low-risk, fundraising, sales, and marketing tool that allows you to raise cash without going into debt funding your startup.
That probably sounds...nice, but like any smart entrepreneur, you need to better understand if rewards-based crowdfunding is actually right for your business needs. We get it. Here are the 7 reasons to crowdfund, along with some of our favorite examples of the smart women who have used iFundWomen to launch and/or grow their businesses:
1. Prove demand before investing in supply
Rewards-based crowdfunding is unique in that it allows you to assess the market demand for your product or service before investing in supply, which is the most critical thing you need to do as a new product or service. ASSESS DEMAND. Do people want what you are selling? You can find out in a low-risk way by crowdfunding, and literally asking people if they want to buy what you are selling. It’s a basic thought, but quite profound. It’s the opposite of what we were taught in Econ 101 – supply and demand.
Taylor Jay, is the Founder & CEO of Taylor Jay Collection, a women’s apparel line out of Oakland, California. She came to iFundWomen with an established business, and was ready to launch into the plus-size market, but needed to make sure her customers would be on board. $30K and 337 backers later, it’s pretty safe to say she proved that there was in fact demand!
2. Finish your prototype
Prototyping is a process. A long process. It often takes 2-3 iterations of a prototype to have something functional and not totally ugly. The process can be long and expensive, especially for new entrepreneurs, so truly, the only smart way to fund your prototype is by crowdfunding. The feedback you get from your crowdfunding backers is an added bonus in the process.
3. Sales & Marketing
Crowdfunding IS sales and marketing. You are selling your product or services to people who want to buy it. Literally. It’s not any more complicated that that. If you are good at marketing your business, you will crush crowdfunding because that’s all it is. A crowdfunding campaign should be a part of your overall marketing strategy.
The Coven, a co-working space for women and non-binary folks in Minneapolis, is an amazing example of a company who expertly used crowdfunding as a sales & marketing tactic for their new business. All four Co-Founders came from successful marketing & advertising careers, and turned to crowdfunding to sell their first memberships to their premiere space. They pre-sold memberships through their campaign and blew their original $100K goal out of the water. At the helm of this campaign was Coven Co-Founder, Alex Steinman. Alex has teamed up with iFundWomen and will be paying forward her marketing & crowdfunding expertise, running a Crowdfunding Masterclass that begins in January 2019. Find out more and sign up now to reserve your space in this course!
4. Pre-tail your line
If you have to put in an MOQ (Minimum Order Quantity) with your manufacturer, and you want to ensure that the amount you produce will be purchased, you can pre-tail your line through rewards-based crowdfunding, and mitigate the risk of holding inventory.
Iva Jewell is a collection of designer clutch and tote bags made with African wax fabric. Founder & Designer, Dionne McCray, was ready to take this side hustle to the next level, and needed to secure funding in order to produce her next line.
5. Build buzz & awareness
When you launch a new business, you need PR. To get PR, you need to have a buzzy, interesting story to tell. Your iFundWomen campaign will give you just that. Crowdfunding is where sales and marketing meet PR. When you get people to write about you, your campaign and website links are now on the world wide web, therefore giving you some much-needed SEO. In short, crowdfunding is an amazing way to get your story out there in an interesting and compelling way, which will generate some buzz for your new biz. See what we did there?
Luminary is a collaboration and networking space for professional women, opening in November 2018 in the NoMad district of New York City. Founder, Cate Luzio came from a successful career on Wall Street, and used her campaign to build buzz and awareness through the press for the opening of her space. Check Cate out in Forbes and The Street. Talk about good PR!
6. Don’t want/aren’t ready for VC
We’ve said it before and we will say it again (and again): Only 1% of companies will ever receive VC funding. Only 2-6% of the venture dollars are allocated to all-women founding teams. So, it’s ok to acknowledge that venture funding may not be right for you. In fact, we encourage you to make that decision so you can clear the alternative funding path ahead of you and raise the capital you need. On the other hand, you may very well be VC-appropriate one day, but smart entrepreneurs are using crowdfunding as the first stop on their funding journeys.
Portland-based YouTuber, Lindsey Murphy, is the creator of The Fab Lab - a digital series for kids interested in STEAM that takes the magic of everyday life and connects it to the scientific process. Lindsey needed to raise money for a new season of her show and knew that crowdfunding was a much more viable and efficient funding option for her as opposed to traditional venture capital.
7. Avoid going into debt
Most startups fail, and that’s ok. What’s not okay is putting up your personal assets, like your house, to fund your startup and losing it all. There is so much to learn from failures that will inevitably benefit you and the future of your business, but pursuing low-risk forms of funding in the early days of your startup or small business will keep you out of debt, and will allow you to make moves as needed when/if your business ends up in crisis mode.
Ladies Get Paid is a community that provides the resources you need to rise up in your career. After successfully growing her startup for several years, Co-Founder & CEO, Claire Wasserman, found herself and her business facing multiple lawsuits and lot’s of legal fees. She turned to crowdfunding in order to rally her community and raise the funds necessary to pay off her legal fees and keep her thriving business afloat.
So there you have it! Seven distinct need states for rewards-based crowdfunding. Hopefully you see yourself and your business in at least one of them. If so, head right on over to iFundWomen and get started. Remember, you don’t have to go it alone! Check out some of our free and optional tools and resources that will empower you to succeed at raising money!
Take that, olden days!