10 Things Black People Need To Know About Crowdfunding

Financial power for local minority-owned businesses


By now most people have hear of crowdfunding, the method of raising capital through the collective effort of friends, family, customers, and investors. Individuals come together to support, via small donations or investments, a person, project or product typically online via social media like Facebook and Twitter, rewards-based crowdfunding sites Kickstarter, RocketHub and IndieGoGo, or equity crowdfunding platforms like AngelList , EquityNet, and CircleUp.

Crowdfunding is a viable alternative to the traditional route used to raise capital to start a business or launch a new product, which would require you to pack up your business plan, market research, and prototypes, and then shop your idea around to a limited pool of individuals. These funding sources included banks, angel investors, and venture capital firms.

However, studies show that African Americans are less likely to receive angel investment. In fact, less than 1% of angel investments go to black-owned businesses. In the first half of 2013, only 8.5% of startups pitching to angels were minority-owned. Only 15% of those minority-owned businesses successfully got funded.

Minority-owned firms also are less likely than non-minority-owned firms to receive loans, recent data shows. And the founders are less likely to apply for loans due to fears of rejection. They’re also more likely to be denied credit, receive lower loan amounts and pay higher interest rates than their non-minority counterparts, notes social investing adviser William Michael Cunningham. Often sought after for his expertise on capital access, Cunningham is the CEO of Creative Investment Research and the author of The JOBS Act: Crowdfunding for Small Businesses and Startups. Along with his team of two, Henry Burger and Howard Williams, he also runs National Crowdfunding Services, an L.L.C., with holdings that includes the Washington, D.C. crowdfunding resource Challenge.

According to Cunningham, here are 10 things Black entrepreneurs need to know about crowdfunding:

1. In 2011, individuals, businesses and nonprofits raised $1.5 billion using crowdfunding. In 2012, that number grew to $2.7 billion. By 2013 crowdfunding was used to raise $5.1 billion.

Read more tips on the next page …

    Pages: 1 2 3

11 Responses to 10 Things Black People Need To Know About Crowdfunding

  1. Pearlene says:

    It would also help if more black crowdfunders had the same type of support from black media as the mainstream has. They are constantly featuring campaigns, even that guy who did it for potato salad got more coverage than the average campaign run by blacks. Many in the community still are not familiar with how crowdfunding works so if they see more stories about it they may be more likely to participate and contribute. I am in the middle of an Indiegogo campaign right now for a line of multicultural dolls called the Stellar Babies http://igg.me/at/stellarbabies
    and it is really hard trying to get coverage so that I can get enough buzz in order to get contributors. Hopefully, things will change.

  2. Pingback: Milwaukee Community Journal » WISCONSIN'S LARGEST AFRICAN AMERICAN NEWSPAPER10 Things Black People Need To Know About Crowdfunding - Milwaukee Community Journal

  3. Pingback: 10 Things Black People Need To Know About Crowdfunding | Crystal Gorham

  4. Pingback: 10 Things Black People Need To Know About Crowdfunding | BlackPressUSA

  5. Pingback: Kickstarter Reveals Which Day People Are Most Likely to Support Your Campaign

  6. Pingback: Black Businesses to Have More Access to Capital

  7. Pingback: Black Businesses To Have More Access To Capital | OFF THE BLOCK NEWS

  8. Pingback: 7 Must Know Facts About Bree Newsome

  9. Pingback: Black Businesses To Have More Access To Capital | Our Voice – The Magazine

  10. Pingback: Black Businesses Can Access Up To $1 Million Easier

Leave a Reply

Your email address will not be published. Required fields are marked *