Crowdfunding Platforms for Minorities and Women Businesses
If you’re an entrepreneur who has decided to preserve creative control of your idea by raising capital through crowdfunding, or if you are a women or minority small business owner seeking additional capital, the next step is to choose the right platform. There are crowdfunding platforms that focus on women (such as IFundwomen), Black business owners (fundBLACKfounders), and the LGBTQ Community (Pinkstart) as well as other services to choose from. Find details on those as well as other Crowdfunding Platforms below.
Crowdfunding has been around for many years as a way for start up companies and business owners to raise money by soliciting funds small investments from a large pool of investors. However, the Internet has made crowdfunding a much more viable and popular way to fund new project for Latinos, women, veterans, Black owned businesses and other minority groups. As they often struggle to get financing from banks or other sources.
Let’s say that you have just launched a new startup, but you need $100,000 to fund it. Unfortunately, you don’t have enough collateral, business experience or assets to get a loan from a traditional lender. Kauffman and Access to Capital for Entrepreneurs report shows that Black and Latino families have 10-20% of wealth than white families, that women and minority face bias when applying for loans, and other barriers. To overcome these challenges, you can use crowdfunding as a way to raise the $100,000.
For example, you could get 1,000 investors to each give you $100 – which would get you the $100,000 you need. All business types can use crowdfunding as well, including start-ups, eCommerce sites, gyms, retail stores, product companies, restaurants, consumer companies, health or medical and really any company (or start up) can try the platforms. Make sure you have a good business plan and market the campaign. In short, if you need capital to turn an idea into a reality or to help grow your small business, here are several online crowdfunding platforms that might be able to fund it, with some dedicated to LGBTQ, Blacks, Latinos, Women and other disadvantaged groups.
Women owned business crowdfunding platforms
This crowdfunding platforms focuses on helping women start-ups, entrepreneurs, and small businesses. Whether a veteran, Black women, Hispanic, white women, or any rage, ace, or religion, IFundwomen can help you get capital for your business or idea.
The female owned crowdfunding now only helps you raise money, but there is a coaching service too. There are grant programs, mentoring services, networking events, as well as other small business or start-up advice. IFundwomen was created by women and is a fundraising platform for women. Read more on IFundwomen.
IndiGoGo is a popular option for entrepreneurs to raise startup capital for businesses that are highly innovative and offer cutting-edge products, internet businesses or services. Furthermore, IndiGoGo offers minority, veteran or female business owners a marketplace to sell their products that have already been funded on the platform.
That means you will have a place to sell your products online after they have been funded. Furthermore, unlike most other crowdfunding platforms, should you fail to reach your investment goal, you can still keep the money that you were able to raise. That is a huge benefit that Black or women owned companies can gain, as they are often starved for capital. Also, IndiGoGo can help you raise money for a nonprofit organization.
Indiegogo is the second biggest player in the crowdfunding space, largely copying Kickstarter’s model (see below) except that entrepreneurs who select a “flexible” campaign are allowed to keep the money they’ve raised whether they met their fundraising goals or not. This may seem strictly superior to the “All or Nothing” model described above, but remember that you have to provide the products and services promised once you keep money. If you fail to raise enough money to realistically deliver on that promise, your concept will be buried in litigation before it can get off of the ground.
Indiegogo also partnered with Microventures in 2018 to facilitate crowdfunding equity transactions, where backers receive a percentage of your company in exchange for their contribution. The cost of choosing this option is steep, as you need to pay $7,000 USD upfront, an additional seven percent of total funds raised, and two percent of your company equity. Your backers will also be charged the higher of $7 or a two-percent processing fee to facilitate the transaction.
Otherwise, Indiegogo’s fees are identical to Kickstarter’s except that backers are charged three percent plus 30 cents per pledge instead of 20. Indiegogo enjoys an especially good reputation in the tech and design industries as well as with women and minority owned businesses, but boasts enough traffic to be a viable option for nearly any idea. Note that over 45% of successful campaigns are run by woman businesses, which is higher than the industry average. Start to crowdfund with IndiGoGo.
Women You Should Fund
Women You Should Fund is a financial as well as reward based crowdfunding platform. Anyone seeking capital from it can also get help from the wider community of experts. Any type of business can be listed, from Technology to internet companies, cosmetics, yoga, marketing and more. The big advantage of this female centric platform is it brings in the hundreds of thousands of women who are already part of the Women You Should Know community. Those women are potential investors.
There is a fee of 5% of the money raised. Not only will Women You Should Fund allow a business to raise money, but mentoring, guidance and advice is also available from the Community. More on raising money from Women You Should Fund.
Other investors, VC firms, and organizations give priority to women entrepreneurs and business owners who need capital. They include Digital Undivided (which focuses on Latino and Black women) and the Fearless Fund.
Black owned business focused crowdfunding sites
Over 50% of Black business owner loans to standard lenders (banks, credit unions, etc.) are rejected. That is about twice as high as white business owner applications. The fundBLACKfounders crowdfunding platform was created to help Black owned businesses (whether male or female founders) get the capital they need.
Not only can a Black business raise the money they need for their business, but they can also get free coaching, take webinars, get advice on how to start or grow a business and more. Many of the investors from this crowdfunding platform are minority as well – many successful black investors use the platform to help other minority businesses. The platform fees are competitive at five percent. Learn more about fundBLACKfounders crowdfunding.
About 12% of crowdfunding is for Black owned companies, and about 50% of the campaigns are successful. Seedinvest is a little different in that the crowdfunding screens businesses. They are very selective in who can use their platform to raise capital. They due diligence on their applications to screen them.
The company focuses on technology companies. Many businesses that use this platform end up using Angel investors and a select few may eventually go public. But as mentioned, Seedinvest does have a fair percentage of Black owned companies as well as women, Asia, and Latino owned businesses among other companies. More on Seedinvest.
This is another investment/crowdfunding type product. Investors will review your business plan online, your funding needs, and decide whether to invest into your business. The MainVest reports that about 60% of Black or Latino crowdfunding campaigns are successful. Female run businesses experience similar success rates. Anyone who is looking to buy into a small growing company, they can invest for as little as $100.
All types of industries can be listed, including online stores, beauty products, and countless others. MainVest focuses on providing capital to businesses that are ignored by traditional lenders, and many of those are Latino, women, veteran, LGTBQ, and other minority businesses. Continue with MainVest.
There are other Venture Capital Firms, lenders, and crowdfunding type platforms of business owners of color. They include New Voices Foundation (for Black or Latino women or women of color), Serena Ventures as well as Harlem Capital.
Other crowdfunding platforms that help women or minority and all businesses
Kickstarter is one of the largest and most popular crowdfunding platforms. It is the number one women crowdfunding platform and is also used heavily by minority business owners, including Blacks, Asian, and other businesses. The company has millions of investors who help fund a wide range or projects of projects. For instance, musicians use the platform to raise money to record albums. Entrepreneurs use Kickstarter to fund their startups. Right now about 11% of campaigns are for Black owned businesses or entrprenuers.
The platform is often used by small businesses of all races and backgrounds to help them fund product development and inventory. However, if you fall short of your investment goal, then all of the money raised is returned to investors – and you get nothing. Furthermore, if you are trying to fund a nonprofit organization, you won’t likely have much success.
Kickstarter was the first crowdfunding platform, pioneering what is now called the “Rewards Model.” Basically, entrepreneurs or small business owners raise money from the public in exchange for providing their product or service when it is ready at no additional charge. You can also launch a “tiered” campaign, where larger donations purchase superior rewards. For example, you might offer a limited edition version of your product, priority access to you and your development team, or exclusive bonus content to encourage larger contributions. Notably, you cannot keep any of the money you raise if you fail to meet your chosen fundraising goal in a set time frame, and you are legally obligated to provide everything you promise once you accept money.
Kickstarter is a good choice for a women or minority owned business. the crowdfunding platform can meet virtually any niche, as its pioneer status means that it has the most traffic in the industry. That said, it can be easy to get lost in a sea of entrepreneurs thinking the same way. Kickstarter charges five percent of total funds raised plus a credit card processing fee of three percent plus 20 cents per pledge paid by each backer. More details on Kickstarter.
Gay, Lesbian, Transgender and the LGBTQ community can be faced with bias or discrimination as well when they try to get a loan. Pinkstart LGBTQ is a worldwide crowdfunding platform. It is open to any business owner, but a focus is on the Lesbian, Gay, Bisexual & Transgender community. Pinkstart LGBTQ allows both for profit as well as non-profit businesses.
Pinkstart LGBTQ offers two different pricing plans, being fixed and flexible. Flexible means the business owner keeps the money raised, even if the goal is not met, but the percentage cost is higher. Fixed is an all or nothing model. More on free Pinkstart LGBTQ.
Fundable for small businesses is very similar to Kickstarter, but it has a much smaller pool of investors. There is also a monthly fee vs. a variable fee. Also, just like Kickstarter, if you fail to reach your investment goal, all of the money is returned to investors. They have equity as well as Reward raises, offer an online community of supporters (including minorities and women business owners), give marketing advice and other support.
Unfortunately, you do have to pay a membership fee to raise money on Fundable. However, the fact that you must pay a fee might make investors take you more seriously than they would on other platforms. This can be helpful for a minority or women owned company, or Black entrepreneur, who faces biases. https://phys.org/news/2019-03-racial-bias-crowdfunding-sites-indiegogo.html. The current fee is one hundred seventy nine dollars per month. Read about Fundable.
Patreon is intended for artists (including musicians, writers, podcasters, online video starts, and other content creators) who are looking for a stable income or maybe even a recurring salary while they work on new material. Many Black, Latino, or women created use this crowdfunding type platform too. You do not have to offer any incentives to solicit monthly contributions, but many creators on the platform choose to offer some variation of the Rewards Model. For instance, a musician might make new music available to Patreon backers before anybody else, while a writer could produce exclusive content for the platform.
The service works a lot differently than nearly all other crowdfunding platforms, and if anything it is more like a membership service. For example, when you raise money from crowdfunding, you are typically seeking a one-time investment from investors. Patreon is different though. Your partners will pay a monthly subscription for your business services. This is why podcasters, artists, and creative type business owners tend to use it.
Becoming a professional musician is an expensive business, and many musicians use Patreon. For example, you have to pay a recording studio to record your albums, have money to live on while you are producing your music, and funds to pay your traveling expenses when you are touring. Patreon can help musicians in two ways. Both from the monthly subscribers and secondly, PledgeMusic can raise your profile and get you more exposure with the listening audience as well as record labels.
Patreon allows you to collect money from investors on a weekly, monthly, and annual recurring basis. The monthly recurring revenue stream is a benefit to any business owner. Therefore, Patreon might be a better way for a minority or women owned company (or creative person) to fund ongoing projects.
Your Patreon supporters are billed monthly, with the platform keeping the standard five to twelve percent of funds raised plus processing fees. Your backers are also free to cancel their support at any time, so your “stable” income may not prove as stable as you initially expected. There are multiple pricing plans (Lite, Pro, Premium) which allows for flexibility for women or minority business owners. The cost is five to twelve percent of your monthly Patreon income, depending on the plan. More on Patreon.
Crowdfunder is part crowdfunding platform and part venture capital firm. It is the leading equity crowdfunding platform for Asian, Latino, Veteran and Black owned companies as well as other businesses. It allows you to solicit lots of small investments from a large pool of investors. However, you can also get bigger investments from large angel investors.
Unlike other crowdfunding options, Crowdfunder does offer business owners the chance to raise a lot more money – sometimes over one million dollars. But any minority owned company or women owned business will need to give out some of their equity as they raise money on this crowdfunding platform. There is a monthly fee for Crowdfunder. There is a free plan to get started, but the monthly fee increases up to $499 per month for the premium plan.
On the surface, Crowdfunder might look more like an old fashion venture capital firm. As there is one component of it that raises money for Latino, Black, women and other businesses from Angel Investors. However, the way you raise money is similar to how other crowdfunding platforms operate. For example, you submit your business plan to their site for its investors to review. Make sure your business plan is detailed with revenue projections, your industry knowledge, competitors, financial statements, pro-formas and more. Then, investors can determine how much money – if any – to give you. Crowdfunder is still a good way to raise the capital you need from multiple investors. More on Crowdfunder.
AngelList is a crowdfunding platform that works in a similar way to getting a loan, but it is more likely for a women or minority business to find success vs. a traditional lender. You can even use it to find a job too! For example, you submit a short application that includes information about yourself and your business plan. Then, the application is sent to several investors and lenders who decide whether to invest in your idea. In addition to applying for funding, you can also apply for a job at their thousands of business startups.
This crowdfunding service also has a number of successful millionaire investors who fund the next start-up. They are smart, experienced investors. Be sure you have financials and a detailed business plan. Raise money, or find a job, on AngelList.
LendingClub Peer to Peer Lender
Getting a loan from a traditional bank can be difficult if you are a Block owned business, owned by a woman or Latino, or in general not a white mail. Traditional banks are also reluctant to give money to a new startup, borrowers that have poor credit, or little collateral. The LendingClub is a crowdfunding – peer to peer platform that operates like a bank.
Basically, it has a large pool of members who loan money in exchange for earning a guaranteed return. It’s especially popular with a lot of small businesses as an alternative to getting a traditional bank loan. The LendingClub might be a good option for you if you plan to borrow less than $50,000. Your interest rate is locked in at a fixed rate. However, your interest rate depends on what you can negotiate with lenders. There are no other fees for women or minority owned companies other than the negotiated interest rate on the loan. Get a loan from LendingClub.
FundingClub.org operates the exact same way as The Lending Club. However, you can borrow up to $50,000 as a personal loan. Also, instead of having to negotiate your interest rate, you will just pay a fixed rate. There are no fees for applying at FundingClub.org. Read more.
GoFundMe is more just about raising money and is not about people investing into your business. While the tool may work for anyone, whether women or minority business or even individual, in general your idea needs to have a strong social mission in order to raise money on the platform. Charities tend to fare well, as do businesses with a commitment to giving back to their local community. There are no time constraints on GoFundMe, and you are always allowed to keep the money you raise. Unfortunately, this site also allows “questionable” or “spam” projects to limit the visibility of more worthy endeavors on the site.
Like the other major players in the crowdfunding industry, GoFundMe charges a 5% fee on all funds raised. There are also credit card processing fees paid by consumers when they contribute to your cause. Try out GoFund Me.
Minority, in particular Black or Latino owned companies or entrepreneurs, often struggle to get the capital they need. Female founders and businesses also struggling. Crowdfunding, in particular platforms that focus on your race or gender, can be great alternatives to traditional banks or other sources of funds.
Depending on your specific idea, a more niche option like fundBLACKfounders, might be a better choice for you than the larger players above. For example, Fundable is a good option for smaller businesses. You can also try to bootstrap your campaign (using your own website and networking skills) to save on processing fees if you have the requisite technological skills. It may also make sense to choose your second option (or even hold off on launching your campaign) if a similar idea is already gaining traction on your favorite platform.
In short, when it comes to finding a way to raise money for your women or minority owned business or to fund your idea, you can turn to popular crowdfunding platforms like Kickstarter, Fundable, and Patreon. If you have a really innovative business idea, you might want to try IndieGoGo. Crowdfunder and RocketHub are two good alternatives to traditional venture capital firms.
If you are interested in a funding option that’s more like a loan, check out AngelList, The LendingClub, and Funding Club Crowdfunding Platforms. Female start ups or women owned businesses can turn to the communities (and source of capital) at Women You Should Fund and IFundwomen. Black and Latino business owners have had success Crowdfunding at fundBLACKfounders, Seedinvest or MainVest. Of course there is Pinkstart LGBTQ, which helps LGBTQ businesses raise funds and gives guidance. Lastly, if you are an aspiring artist trying to turn your hobby into a full-time gig, then check out Patreon. While some Crowdfunding platforms help Blacks, Women, Veterans, or other minorities business owners or entrepreneurs, they can all be effective.
By Jon McNamara