We are all a little uncertain what the future holds, especially anyone who owns a small business. And if you are a woman business owner, the prospects might feel even more daunting. Now more than ever we need an organization like iFundWomen — a crowdfunding platform with the goal of helping female entrepreneurs launch successful businesses. We interviewed co-founder and operations director Kate Anderson before any of us knew what social distancing was or had considered applying for a Paycheck Protection Plan. But her words and advice resonate even more in the new normal. If you need to raise funds for your business, read more below, listen to Kate’s episode of The Passionistas Project Podcast and visit iFundWomen.com for more details.
Passionistas: What's the one thing you're most passionate about?
Kate: I have a lot of passions but I think one of the things I'm most passionate about is representation of women — seeing women represented in boardrooms, seeing women represented in movies, seeing women represented in books. I think the more we can see ourselves in women in media, on television, magazines, too, the more we can imagine that we can be there. That's really one thing iFundWomen is working hard to do — promote more women's businesses, help women to elevate their businesses more, so that we can see more women in boardrooms and more women as CEOs and more women on the cover of Forbes and Fortune.
Passionistas: What's the mission of iFundWomen?
Kate: Our mission is to close the funding gap for female entrepreneurs. We really want to provide access to capital, coaching and community. That is our core mission. That's our North Star and that is what we work day in and day out to do.
Passionistas: How is iFundWomen different from other crowdfunding websites?
Kate: We're the only crowdfunding platform speaking specifically to women. But beyond that we are the only crowdfunding platform with expert business coaching tied into our business model, with a network of women business owners that work together to accelerate knowledge and ignite action. We have a pay it forward model that at the end of every month, we invest 20% of our standard crowdfunding fees back into live campaigns on our platform. So we're actually paying for the revenue that we're making from campaigns. And then we also are offering sponsored grants. So we broker grants on behalf of generous partners who really want to put their money where their mouth is by supporting women entrepreneurs raising capital on our platform.
Passionistas: Talk a little bit more about why that's so important. And the current state of funding for women owned businesses.
Kate: The current state of funding for women owned businesses is not where we want it to be. I think people are familiar with these stats, but women received 3% of venture capital financing and women have a harder time getting loans. When they do get loans, they get smaller loan amounts and higher interest rates. Women are starting 1500 net new businesses every single day in the US. You're a woman in the US you have a great idea. You're starting a business. Well, what do you do? How do you get funding for your business? The first thing most people do is they bootstrap. And bootstrap means spending your own money to grow your business. And that works really well if you have money to spend. But if you don't, how do you get your business off the ground? We are the place where women could do that.
We don't think that you should go into debt funding the earliest days of your startup. Even if you do qualify for a loan, that's what you're doing is you're going into debt funding the early days of your startup. And the fact that the matter is most startups fail. And it's important that when you're growing it, you do it in a way that's smart and you're smart about the capital that you take on so that you don't have a failing startup. And then loans to pay back or debt to pay back, credit card debt, whatever it is.
Passionistas: Let's take a little step back and just explain to a crowdfunding is for someone who's listening and doesn't really understand the concept.
Kate: Crowdfunding is when an entrepreneur raises small increments of money from lots of people that they know in their personal, professional, social networks. That adds up to just enough money to get their project off the ground. So crowdfunding formally as we know it has been around for about a decade, which is the idea of raising money online from lots of different people. But historically crowdfunding has been around for a long period of time. The Statue of Liberty is a project that was crowdfunded. Bringing the base of the Statue of Liberty over was crowdfunded by many people contributing pennies to see something happen. And I think that people really liked that story because it resonates with the idea that lots of people can give amounts of money that feel comfortable to them to create something that's awesome and spectacular and has lasting value, right? I think we all wish that we could contribute to see the Statue of Liberty or whatever that kind of iconic project is for us.
But crowdfunding, there are two different types of crowdfunding. There's rewards-based crowdfunding and equity crowdfunding. Equity crowdfunding is a newer concept that came out of the jobs act where you can have people contribute to your business in exchange for equity. So that's ownership in your business. iFundWomen as a rewards-based crowdfunding platform. So people are funding your campaign in exchange for physical or digital reward that they're getting. And the reward is really can be your product, services, unique skills. It's really your opportunity to thank people for contributing to your campaign but also entice them to back your campaign and support your campaign. But because you have awesome rewards that you want to take part in.
Passionistas: You mentioned that iFundWomen reinvests 20% of your fees into campaigns on the site. Talk about why you made that decision and what kind of campaigns you back.
Kate: When we started iFundWomen we knew that we wanted to have a give it back model. We knew we had this idea of lifting women up constantly. So if one campaign gets funded, we wanted that campaign to help another campaign get funded and create this virtuous cycle of funding and supporting female entrepreneurs. The way we manifest today was we take iFundWomen takes a 5% fee on any amount of money that you raise. And then at the end of the month, we take 20% of the revenue from those fees and directly reinvest them into live campaigns on the site that are actively raising money. We do not pick them. Algorithms, pick them. But it's been awesome to see, and it varies every month from maybe one campaign that will be picked or five or six campaigns that will be picked. But those campaigns that are way more likely to get funded and it's a great opportunity for them to say that their networks, my campaign is so good that the iFundWomen team believed that I should be the recipient at this. And then the money just gets them that much closer to their mark. It's everybody's favorite day of the month.
Listen to Kate’s complete episode here.
To learn more about crowdfunding for female founders and get expert startup coaching, visit ifundwomen.com.