On November 19th, we celebrate Women’s Entrepreneurship Day. One of the crucial ingredients in the recipe for success in business is the availability of funding to start and grow an enterprise. Unfortunately, women traditionally are at a disadvantage while looking for seed money from venture funds or private investors.
But now, female entrepreneurs have an alternative funding option: they can ask for money from the crowd of their potential customers. We’ve decided to talk to some of the project creators who are either females or targeted female auditory. We also conducted a research on hundreds of Kickstarter campaigns that raised over $20,000. Here is what we found:
• None of the top most successful campaigns had women among their founders
• Among 82 Kickstarter projects that raised over a million dollars, only 6 were created by women; the most funded female-led campaign holds the 37th place.
• The top funded categories on Kickstarter are Games, Film and Design. They have the least number of successful female campaign creators. Film and Design have had ONE female-led campaign among the top ten most funded projects while Games have had ZERO.
• The same time, the most “female friendly” categories, Dance, Theater and Journalism, are among the least funded, representing a combined only 3% of all the money raised by successful campaigns on Kickstarter.
We believe that male dominated categories have the strongest Kickstarter communities of serial backers. There are more than 2 million people who supported more than one project, and the vast majority of them are males. These people bring huge value to any project by not only pledging higher amounts of money, but also by actively participating in the project’s promotion, sharing it through social networks and brining new backers on board, and commenting on the project’s page. Due to that fact, the campaigns targeting men (video games, hardware, robotics, male fashion, comics, for example) are more successful in attracting larger amounts of money.
The same time, most of the successful campaign creators we interviewed didn’t see a problem in the male dominance among the backers and believed that women are generally well educated about the concept of crowdfunding. Interestingly enough, the only man we interviewed because of his very successful children’s book project, Zach Weinersmith, (he also ran three other campaigns, raising more than $900,000 total) said, “It’s entirely possible women do less crowdfunding. It takes a certain amount of narcissism to crowdfund, and there’s some sociological evidence that men tend to overestimate their talent, while women do the opposite.”
We noticed that most of the creators mentioned promotion through their personal connections and social networks as more effective than through the traditional media. The entrepreneurs are optimistic about the future of crowdfunding and the role women will be playing in it: “As more female entrepreneurs make headway on crowdfunding sites, more women will become interested. Once you engage a female consumer/backer on a site such as Kickstarter, I would guess that they’re more likely to return for the sake of a unique shopping experience that puts them at the cusp of new technology, fashion, and gift items. It is more difficult to engage females for Kickstarter since there is slightly less awareness. However, they seem to have a better attention span getting through the purchasing process!” (Sofia Dickens, who raised $31,200 for her children’s game project).
Women are mostly looking for “friends and family” types of funding (under $5,000). Because it is much easier to raise it (60% of all Kickstarter campaigns fail, and among those who succeed, more than 70% raise below $10,000), they are more often hit the goal.
It may be enough for a one time project, but not to cover startup costs for a new business. The higher the amount of money raised by a project, the lower the percent of successful female creators. Here is a recent screenshot of the live campaigns that raised over $20,000:
• Women were the creators or co-founders of 15% of the campaigns that raised between $20,000 and $50,000
• This number drops to 6% for the campaigns that raised between $50,000 and $100,000
• Only 2% of the campaigns in the $100,000+ group were launched by females
These numbers show that while women can successfully compete for the crowd money for small, project-based campaigns, for business level funding (startup costs), female entrepreneurs reach success rates similar to those in VC or angel financing. So, we have to agree with the conclusion made by researchers from the University of California, Berkeley, who tried to determine whether crowdfunding creates better opportunities for female entrepreneurs: “The initial analysis of Kickstarter data suggests that this is currently not the case.”