Many female entrepreneurs are looking for new ways to obtain capital, especially given that women owned business continue to receive fewer loans and secure less financing from venture capitalists and angel investors. Answering the call for capital sources is THE VENTURE CROWD, a project aimed at educating women entrepreneurs and investors about a relatively new financing and investment option available to them—equity crowdfunding. Internet-based equity crowdfunding platforms enable small companies to issue shares over the internet and receive small investments from accredited registered users in return.
The project will help fund actionable tools, including a guide and training, to educate both entrepreneurs and investors about how to take advantage of equity crowdfunding. To provide this education for free, The Venture Crowd will itself be funded out of Plum Alley, a reward-based crowdfunding platform.
The Jumpstart Our Business Startups (JOBS) Act was signed into law by President Barack Obama. Title II of the JOBS Act made is so that for the first time in nearly 80 years, private startups and small businesses could raise investment funding publicly, using sites like Facebook or Twitter to help spread the word, and taking in investment online via equity crowdfunding sites.
Title II of the JOBS Act can potentially level the playing field for women entrepreneurs by creating equity financing for companies that are publicly raising money. However, few women are participating, according to Crowdnetic, which maintains an equity crowdfunding database. Women-led businesses achieve higher returns on equity to investors than all men-led businesses, according to the SBA Office of Advocacy. Yet, only one woman raises equity crowdfunding for every five men that do.
“Right now only a tiny percentage of Americans with the wherewithal to be angel investors and invest via equity crowdfunding are,” according to Geri Stengel, President and Founder of Ventureneer. What’s more, the vast majority of angels, 80% , are men who mostly back all male executive teams, reports the Center for Venture Research.
“Investing in women-led companies via equity crowdfunding is a way to diversify an investor’s portfolio,” notes Stengel. “Equity crowdfunding changes the way entrepreneurs finance their businesses, yet few women use it.”
Women-owned businesses represent 30% of all firms, but only 16% of firms that have employees and 10% of high-growth firms, according to the Kauffman Foundation, which researches and advocates for entrepreneurship. “Without education and the critical infusion of capital, women will continue to raise companies with lower sales, profits, and fewer jobs,” adds Stengel. He believes THE VENTURE CROWD will be a game changer for women entrepreneurs and investors.