Crowdfunding Options Broaden Horizons for Women Entrepreneurs
When you are an entrepreneur raising money is a key focus of your efforts. Once you raise that first round, there will always be a need to raise more in order to grow your business. So strap in, entrepreneurs, when you take on that CEO title realize that title means “chief fundraiser” among many other things.
Many entrepreneurs start out with small business loans or do what a lot of entrepreneurs do in the early days…fund it themselves via small business loans, credit cards and personal investments. Loans and personal investments put you at further risk, but sometimes in the beginning you “gotta do what you gotta do” and you gotta be committed. As an entrepreneur you have to be all in.
Once the ball is rolling you can reach out to friends and family, angel investors and ultimately VC’s. However, for women in particular, the angel investment and VC community haven’t quite gotten on board. We hear again and again from women how difficult it is for them to raise money from these sources because quite often the men at the table don’t “get” their vision or product. This is because, according to SheEO founder and CEO, Vicki Saunders, entrepreneurs often launch businesses to solve problems they have addressed in their own lives. Just look at Genneve, a feminine lubrication product, Thinx the period panty and even Spanx, personal shapers – a product that every hosiery manufacturer that Sara Blakely pitched in the early days thought would never be a hot product. Boy were they wrong. It took the daughters of Sara’s first manufacturing company to convince their father that he should make Sara’s first prototype.
SheEO’s platform has helped numerous entrepreneurs reach their next fundraising goal through an initiative Vicki Saunders calls “radical generosity” gathering thousands of dollars from thousands of “Activators” (women who want to invest in women owned businesses) into one fund and redistributing it via a voting process. Its a unique formula that is gathering women together to support and nurture each other’s businesses. And its working. Companies like Abeego (natural, breathable and reusable beeswax food wrap) and Skipper Otto’s Community Supported Fishery have been able to grow their companies and gain momentum thanks to funding and mentorship from the team at SheEO.
Crowdfunding is another option. Thanks to the JOBS Act and Regulation Crowdfunding that came into effect on May 16, of 2016 your friends and family, and your established clients and fans can all invest right alongside accredited investors on one regulation crowdfunding platform.
At a recent event at StartEngine, a crowd funding platform in Los Angeles, Sona Karakashian of CrowdCheck explained “The JOBS Act has made it possible for crowdfunding platforms to broaden the opportunity for entrepreneurs and investors. Regulation Crowdfunding allows both accredited and non-accredited investors to invest via one vehicle.” As a Due Diligence Analyst at CrowdCheck, Sona has a wealth of experience assisting companies that utilize various forms of online capital raising including securities crowdfunding, offerings to accredited investors, and exempt public offerings of securities under Regulation A and Regulation Crowdfunding. She assists companies through due diligence and disclosures required when listing their securities with registered broker-dealers and other online securities intermediaries. In addition, Sona helps companies identify and resolve issues related to their corporate governance matters.
Mary Frances Knight, Chief Compliance Officer at StartEngine concurs. She sees more opportunity for women entrepreneurs through crowdfunding as it establishes one online destination for entrepreneurs to drive all interested parties to invest. This includes fans and established clients, people already buying your products. This way you’re raising money from people who believe in your product and have a vested interest in seeing you succeed.
Graced by Grit, a women’s active wear company based in Solana, California recently launched their StartEngine crowdfunding campaign. 14 days into their 90 day campaign they had already raised $61,000 of their $107,000 goal. All thanks to an established client base and a solid (and compliant) marketing plan.
Once you launch a crowdfunding campaign – marketing it is the key. Campaigns only run 60 to 90 days, so there’s a short window in which to drive investors. (According to SEC regulations you cannot announce your campaign prior to launch but you can start marketing it once its live, as long as you follow SEC regulations.) “Many entrepreneurs see a bump in sales during their crowdfunding campaign simply as a by product of the marketing campaign,” added Kinsey Cronin, Director of Business Development for StartEngine.
So how do you make sure your marketing campaign is in compliance? Companies like StartEngine provide you assistance when you use their platform. Mary Frances Knight’s role at StartEngine is to make sure your campaign is in compliance. They also introduce you to resources like Sona Karakashian of CrowdCheck and Holly Horner, CEO of LemonLight, a marketing company that has produced more than 250 crowdfunding videos, and their clients have raised more than 25M dollars on crowdfunding platforms. Holly’s team can take you through a marketing campaign to support your crowdfunding campaign from end to end. This includes a video, social media copy and posting and public relations. To ensure your are fully in compliance CrowdCheck can also review your posts prior to going live.
Be aware, launching a crowdfunding campaign is an investment. Your incorporation paperwork and legal documents need to be in order. You may need to hire a compliance expert and marketing firm as well. Anticipate a $15,000 – $20,000 investment. If your campaign is successful, you will recoop this in no time. But, without the investment, you are not likely to meet your goals. So pull that CEO belt a little tighter and go for it. If you’re ready for start-updom these risks are part of the ride.
Work-Life wellness expert and best selling author Samantha Ettus recently ran her first fundraising campaign on iFundWomen, a crowdfunding platform that operates differently than StartEngine as it offers contributors “rewards” for supporting projects but not a true investment in a business. Samantha said “It was a very challenging experience running a crowd funding campaign, requiring a lot of effort and many asks of my community.” Thanks to that hard work she exceeded her goal of $20,000 with 232 backers within 45 days and is launching her first Pie Life Planner to accompany her recent book The Pie Life. Marketing her campaign is what helped her achieve and even exceed her goal.
When thinking about raising money, don’t overlook new avenues. None of them are easy, but there are options that help you utilize your natural resources, friends, community, followers and buyers for greater success.