Wednesday Wisdom from Karen Cahn, CEO of iFundWomen
We’re halfway through the week, and it’s time for a boost of inspiration to keep us going. Our #WednesdayWisdom blog series taps into the minds of industry leaders and disruptive visionaries who are working to build the future of entrepreneurship.
In this piece by Karen Cahn, CEO of iFundWomen, a crowdfunding platform for women-led startups and small businesses, she lends her expertise as she busts common crowdfunding myths.
Busting Common Crowdfunding Myths
1. MYTH: Magical Money Elves Exist
REALITY: Magical Elves don’t exist. Crowdfunding is when YOU, the entrepreneur, go out to your FFFs, i.e. your friends, family, followers, people in your professional network, i.e. people you know in real life, to contribute money to your campaign to fund your business. The goal is for you to get hundreds of people to give small increments of money, that add up to enough money to get your business off the ground. There are no elves. I know, it’s sad. Get over it. You don’t need elves – what you need is to get scrappy and figure out how much money you really need to build your business, then go out and make it happen yourself. One of our fastest funded campaigns, whose creator shall remain nameless, emailed her friends and said, “You are not my friend if you do not fund my campaign.” She’s right and it worked. She got hundreds of funders. Crowdfunding really shows you who is your friend and who is not. People can pledge $5 or $10 bucks and it’s important to tell your friends that even a $10 pledge + a share on social is beyond appreciated. Think about if everyone you know pledges $10. You are funded! Now stop complaining and go do it.
2. MYTH: Crowdfunding Means I’m Giving Away Equity in My Company.
REALITY: Rewards-based crowdfunding platforms, like iFundWomen, allow you to sell products or services in exchange for cash, similar to an ecommerce transaction. This means you are keeping 100% of your company, and you are not giving away equity in your company, nor is it a loan. You also don’t have to pay the high-interest rates women receive on small business loans and you don’t want to give away equity by trying to raise an angel round prematurely.
3. MYTH: People will organically find my project
REALITY: Everyone loves to talk about the crowdfund that raised millions of dollars in nanoseconds. The reality is a successful crowdfunding campaign, like a business, requires planning, marketing, and a clear strategy. You have to get out your megaphone, well in advance, and start telling your tribe that your campaign is coming up, then ask them if you can count on them for support. Jen Coulombe from Sat Nam Babe started a line of baby yoga clothes made from recycled plastic bottles, and she announced her campaign more than six months before launch! She blogged, posted, and gave everyone the heads up that her campaign was coming soon to a feed near you! Guess what? It worked. Within the first week of her campaign, she was over 50% funded. She kept the heat up on her marketing throughout her 30-day campaign, unwavering in her energy, and she got funded. It’s all about pre-planning and pre-marketing. Again, the magical elves don’t exist.
4. MYTH: It’s Embarrassing
REALITY: It’s Empowering! You are finally showcasing your hard work to the world and selling your product to your first customers – get psyched! This is what you’ve been working so hard for – product/market validation and actual paying customers.
When you crowdfund, you truly just don’t have time to go through any shame spirals. As part of their crowdfund for their first company, iFundWomen’s Karen Cahn and Sarah Sommers went and literally panhandled on the streets of New York to get their campaign funded on a 100-degree day in mid-July. They had NO SHAME and neither should you! It was also an awesome bonding experience – so grab a co-founder or friend and hit the streets. Accept cash and then put it in your campaign. Go have a bake sale. Host a crowdfunding party at your house and get your girlfriends together for wine and fun. Get creative with how to engage your FFFs. Sell them the rewards they want to buy. Sophie Ellsberg and Alex O’Daly are selling a fabulous Hunter’s Tote which goes along with the theme of their film, Old Habits. In their first week of their campaign, they’ve sold five!
Ladies, let’s not forget, we are naturally good at this! Research shows when women launch crowdfunding campaigns, they are more likely to hit their goals. Women are natural storytellers because they are able to connect emotionally – which is critical to a successful crowdfund. Crowdfunding requires putting yourself out there to tell the story of your business, highlighting your own successes, and promoting yourself. BUT the confidence gap is real which is where coaching comes in. Mentors and a supportive community of fellow entrepreneurs empower women to put themselves out there to realize their goals.
5. MYTH: It will be a distraction from my overall strategy
REALITY: It should be a central part of your business strategy. A crowdfunding campaign is work – there’s no way around that. Four weeks of pre-planning and four to six weeks of full court fundraising. Whether you are an early stage startup trying to prove there’s a market for your product or an existing business looking to fund your growth, a crowdfunding campaign should be a key part of your go-to-market. You CAN crowdfund and grow your business at the same time, and if you work hard enough you can leverage your campaign to create long-lasting lucrative partnerships for your business. That’s exactly what happened to Wanona Satcher, a landscape architect out of Atlanta who is currently running a campaign through iFundWomen. Wanona is the founder & CEO of Plug-in Pods by Rejuve, which repurposes shipping containers as affordable housing, and small business spaces in low-wealth communities as a way to close the income equality gap among women and people of color. Her iFW campaign just recently led to a partnership with a local developer in Atlanta to build two community pods in a low-wealth neighborhood. The visibility of her campaign led to several pods being commissioned within her local community. That’s the crowdfunding dream come true!
- Validate product/market fit: Investors view a crowdfund as an initial gate to prove there’s a market
- Refine marketing strategy: Gives you an opportunity to perfect your marketing strategy through coaching and video services
- De-risk your launch: People get to know you and your business/product and give you real world feedback
- Investors are now regularly requiring a crowdfund before investing VC dollars so your iFundWomen campaign is the first stop on your funding journey – but it’s an increasingly critical one.
Launching or growing your business is all about maximizing your opportunity and limiting your risk. The single most efficient way to do that is through Crowdfunding.
For an extra dose of #WednesdayWisdom, read our interview with Kara Goldin, Founder and CEO at hint inc., pure water with nothing but natural fruit oils and essences, to discuss her brand and her advice in navigating fundraising hurdles, how to find the right investors, and the importance of storytelling in brand building.