Women in business: how crowdfunding can improve access to finance

The rise of crowdfunding platforms aimed at generating investment for small businesses has helped to democratise finance – and make it easier for female entrepreneurs to find backers.

But crowdfunding is playing a particularly vital role in helping female entrepreneurs access the capital they need by bypassing the traditionally male-dominated venture capital and business angel options.

The perception that traditional equity funding routes are more likely to benefit male businesses seems to be borne out by the evidence: as reported in the Alison Rose Review of female entrepreneurship, just 13% of senior members of UK investment teams are women, while almost half of all teams have no female representation at all. And when it comes to actioning finance, just 1p in every £1 of UK venture funding goes to female-led start-ups.

How crowdfunding can close the gender gap

Crowdfunding, however, is a way of raising money from a large number of smaller investors – and, according to many women entrepreneurs, it can overcome the disadvantages they usually face in accessing funding.

Emma Bianco, founder of Little Earth Baby, a manufacturer of sustainable baby products, spent much of 2019 trying to raise investment from private backers.

“I was told at a pitching event that only a small percentage of investor money goes to female entrepreneurs – and the advice was that if you’re raising money as a woman, you shouldn’t smile and never wear your hair down,” she says. “I thought: ‘This is ridiculous.” It made me really cross.”

In some meetings with private investors, Bianco adds, she was asked about her children – how she would be able to run a business while looking after them, as well as whether she was intending to have any more. “I thought: ‘I wonder if this was my husband raising this money, would he be asked the same questions?’”

At the end of 2019, Bianco decided to launch a crowdfunding campaign on Crowdcube to raise £110,000 – a target she has since exceeded by almost £40,000. “I think crowdfunding is great for early-stage businesses, whether or not they are female-run,” she says. “A lot of the private investors were put off because we didn’t have traction and couldn’t prove our business model.

“And, yes, in my crowdfunding video I smiled and wore my hair down.”

Raising money from your supporters

Anneke Short, designer and co-founder of the Camden Watch Company, is also a fan of the way crowdfunding can help businesses raise money from sources that were untappable a few years ago.

In 2017, her firm ran a Kickstarter campaign to finance the development of an automatic watch – a self-powering but more expensive product that many of her customers had been demanding.

“Crowdfunding had been on our radar for some time – we’d seen other businesses do it – and we realised we had the crowd in place already, the customers asking for an automatic [watch],” Short explains. “The number of women who get funding from VCs and the proportion of women on VC boards is ridiculously low. What crowdfunding does is strip that away, and it puts power back in the hands of everyday people. 

I was told at a pitching event that only a small percentage of investor money goes to female entrepreneurs – and the advice was that if you’re raising money as a woman, you shouldn’t smile and never wear your hair down

Emma Bianco
Founder, Little Earth Baby

“So, if your crowd is there, rather than having to convince a probably unrepresentative board, you can talk to the people you are actually trying to market to.”

Overcoming the age barrier

Crowdfunding can also help younger entrepreneurs access investment, says Julianne Ponan, founder of healthy food company Creative Nature. “I feel that it’s harder for a woman to get investment than a man – at least in my experience,” she says. “Youth may also be a factor here: I’ve just turned 30, and often people think I’m much younger. I do believe a young-looking woman who is trying to grow their business has less chance than a man of similar age.”

Ponan appeared on the BBC’s Dragons’ Den programme and was successful in obtaining an investment offer valuing the company at £300,000. But she decided to turn down the deal, which would have seen her hand over 25% of the equity in Creative Nature, in favour of crowdfunding through the Seedrs platform.

“My feeling was, I’ve given up my whole life for this business and I don’t want one or two people that I don’t know well to take a large chunk of my hard-won turnover or profit,” Ponan explains. “Crowdfunding did feel like a better route for me and that was, in part, due to my being a woman: I wanted something more collaborative, more supportive in terms of my vision for Creative Nature – and I didn’t want to be driven by someone else’s vision.”

From the experts: tips for a successful crowdfunding campaign

1. Give your campaign enough attention: “You need to have a dedicated person running the campaign on a daily basis as it takes a lot of work,” says Julianne. “You must assign that task to a competent team member who has been integral from the start so they can instantly get on with the job, particularly after launch.”

2. Don’t give too much information away: “The financial documents you include with your pitch are in theory available for anyone to look at, including your competitors,” warns Emma Bianco. “Be careful what documents you put up with your pitch.”

3. Get the presentation right: “It’s easy to do a great video these days just with your iPhone,” says Anneke Short. “People won’t accept something that looks shoddy. And you have to completely nail what you want to say in your presentation. Transparency in the pitch is also really important: for example, how you set your target and what you are going to do if you exceed your target.”

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