October 22nd, 2014
Why Equity Crowdfunding Is Good News For Women
Forbes | By Shereen Shermak | December 4, 2013
The CEO of Launch Angels on why crowdfunding means both more investment in female-led businesses and more female angels.
Equity crowdfunding is in its early stages, but even at this point you can glimpse the potential. And that potential includes promise for both women angels and women-led companies.
The Equity Crowdfunding Explosion
First, a definition. Equity crowdfunding is investing in early-stage companies through web platforms, typically receiving stock for your money. At this point, only accredited investors (high incomes or high net worth) can participate. However, regulations are still being defined that may loosen that restriction.
Even under current restrictions, equity crowdfunding is rapidly growing. There are about 350 platforms in the US, with close to the same number around the rest of the world. According to GoGetFunding, among all the types of crowdfunding (including donation and loans), the equity crowdfunding segment grew the most from 2011-12—by an impressive 114%. And some projections show that $3-4 billion will be raised through equity crowdfunding in 2013. Just as tellingly, even as equity crowdfunding blossoms, venture firm investments are down.
Equity crowdfunding is more than just a new way of raising money. It’s filling a hole in funding. You may have noticed ‘the gap’ in financing between friends and family investments and venture capitalists. Angels (wealthy individuals who invest their own money in startups) are in the same “neighborhood” of contribution as friends and family. But they are not generally accessible, with 70% of their deals done locally (Halo Report, Angel Resource Institute.).
Women-Led Companies and Women Angels on the Rise
Equity crowdfunding is democratizing funding in more ways than one, including opening doors for women. Some crowdfunding sites boast great statistics on women-led investing. At Indiegogo, 42% of successful campaigns were female-led. A majority of offerings on CircleUp are women-led deals. Women have also been serial backers more than men.
Equity crowdfunding might be impacting angel investing as well. According to the Center for Venture Research, between 2011 and 2012 alone, the number of women angels increased by 80%: from 12% of investors to 22%. Part of this is likely attributable to the ability to identify deals online through crowdfunding sites.
On the Side of the Angels
I often hear women automatically dismiss themselves as potential angels. The reasons most commonly given:
- I don’t have the wealth to angel invest.
- I don’t have the time to angel invest.
- I don’t have the network to find the ‘good’ deals.
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Increase your organization’s profile and gain access to a dynamic group of industry front runners. Learn more eBrochure | Prezi or contact us at email@example.com.