Women-Owned Businesses in Quest for Alternative Financing Options
The 2013 State of Women-Owned Businesses Report found that there are 8.6 million women-owned businesses in the United States. These companies generate over $1.3 trillion in revenues and employ nearly 7.8 million people. Between 1997 and 2013, the rate of women-owned firms increased by 59%, which was1½ higher than the national average.
In spite of these encouraging statistics, women are still not operating in the markets at their fullest potential. A study by Stanford University estimated that roughly 4.2% of female-owned businesses received venture capital funding in 2013. A consensus of several studies examining women’s raising capital successes revealed they generally get less financing than their male counterparts. But here’s some upbeat news on the subject: equity crowdfunding is soon to be passed into law and may be the answer to this ongoing problem for female business owners. In fact, North Carolina Congressman Patrick McHenry declared in the Boston Business Journal that the equity crowdfunding bill might pass as early as July 2014.
Crowdfunding – a Lady Friendly Financing Option
The growth and expansion of women-owned businesses largely depends on their savings, credit scores and families, leaving them predisposed to risk. Even though no studies suggest women face outright discrimination, they clearly encounter diverse obstacles on the path of entrepreneurship. Factors such as structural barriers and having different motivations for their firms block access to capital, which in turn decreases their ability to grow and increases the risks for financial distress.
However, there is light at the end of the tunnel. This year on Women’s International Day, Indiegogo reported that 47% of their successful crowdfunding campaigns were run by women. Female-owned businesses are nearly four times more likely to succeed in raising capital through crowdfunding than through traditional means. Equity crowdfunding may just be the missing link for female entrepreneurs.
From Good Looks to Appealing Business Outlooks
A 2014 global study of business and gender-specific issues in 30 countries ranked the United States as the #1 country for businesswomen to prosper. Although they’re still cautious about the nation’s economic recovery, a Hartford Financial report showed female entrepreneurs feel more confident about the success of their business than male company owners. Women are naturally empathetic communicators and dedicated supporters. Their demonstrated optimism, willingness to fund social projects and active presence in numerous markets are just a few reasons why we believe the equity crowdfunding model will fit them perfectly.
By democratizing the world of finance, equity crowdfunding has the power to turn the marketplace into a micro-version of our society. The typical entrepreneur and/or investor will no longer be the middle-aged caucasian male, but an evolved, diversified, equally-gendered hybrid. There is a demanding need in female-owned companies for an alternative means of gaining financial independence and lessening the reliance on bank loans, personal savings, venture and angel capital. While equity crowdfunding is expected to disrupt the dynamics of the entire U.S. marketplace, truCrowd believes it might turn out to develop even more benefits for businesswomen – entrepreneurs and investors alike.
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