It’s a widely known fact that women have a harder time getting their start-ups funded than men do. Part of this is the pervasive stereotype that future billion-dollar CEOs come in the form of Bill Gates, Steve Jobs and Mark Zuckerberg. Another is that women are underrepresented in tech as a whole, both as founders and VCs.
This has come to global attention lately, with multiple initiatives being undertaken to solve the problem. The main push at the moment is to get more women into “gatekeeper” roles. The idea is that once we have a higher representation of women in roles that matter, they can pull other women along with them.
What the Kickstarter stats say
That’s all fantastic for the future, but what if you’re trying to fund your tech startup right now?
Luckily women have an alternative, and it actually seems to favor them over men.
A second study examined 1,250 projects in five categories that were seeking at least $5,000 between 2010 and 2012. They found that over 65 percent of women-led tech projects got the money they were looking for. And that was with these projects only accounting for 10 percent of all tech projects on the site. Compare that to just 30 percent of male-led tech projects hitting the mark and it’s obvious that for women, crowdfunding may be the way forward.
The cost of tech startups
Women seem to have a knack for starting their businesses with less cash upfront. In fact, they tend to start with half of what their male counterparts have. This makes crowdfunding sites a viable option as the average tech project brings in $80,000 to $100,000 according to Kickstarter. While getting backed by a VC can bring in hundreds of thousands or even millions of dollars. These trends continue on Kickstarter, with women asking for, and receiving, less money than men.
Change to Kickstarter’s Terms of Service
But the world of crowdfunding comes with its own risks. Kickstarter has recently updated its Terms of Service to protect backers. Kickstarter stressed that creators are entering into contracts with backers. If a project goes uncompleted, they’re in violation of that contract.
In order to bring it to the “best possible conclusion” they must explain what happened, try and resurrect the project, show the money was used responsibly and they must return any remaining funds. If they haven’t done all of that, a backer can sue. This happens rarely, but when it does it can have terrible consequences.
Potential users also need to understand that any funds they get from Kickstarter are considered income, and as such they’ll be taxed.
While an ideal world would offer an equal amount of founders and backers for men and women, crowdfunding is a viable option. Companies like Kickstarter and Indiegogo offer significant upside for women who have a great tech startup idea, but just can’t get the backing. Just be sure to take the necessary steps (like incorporating) before you take the plunge so you’re not personally on the line if your idea doesn’t pan out.