by Brenda Bazan and Nancy Hayes, CoFounders of MoolaHoop
When we first met Sonal Gerten, founder of Tumblewalla, a children’s clothing line, we were struck by her story. Sonal had taken the courageous decision to step out of her comfort zone and start a new career as an entrepreneur and business owner. She needed to raise the funds to produce her organic children’s clothing Spring 2014 collection and worked with us to launch a crowdfunding campaign on MoolaHoop. Exceeding her goal of $9,000, Sonal raised $10,600.
At MoolaHoop, we work with women owners of small businesses to build crowdfunding campaigns to grow their companies. Many of the women we work with are like Sonal and others profiled in Career 2.0 – they came to entrepreneurship or their “Second Act” after other careers and are embracing the opportunities and challenges.
We ourselves are no strangers to “mid-life” career change. Having met at IBM 30 years ago, we kept in touch through job changes and geographical moves. Brenda left IBM after 25 years and worked for an organization providing microloans to women in Africa. She also has experience as a small business owner and consultant to women-owned businesses. After 20 years, Nancy moved from IBM to serve as CEO of two different nonprofits. From there, she became dean of San Francisco State University’s College of Business and subsequently CFO of the university.
MoolaHoop was born from our shared interest in issues affecting women in business – first women in the workplace, then women as entrepreneurs and business owners. It is incredible that women launch more than 30% of the businesses in the US, yet receive less than 5% of venture capital funds and 12% of institutional debt. To start their companies, women tend to use more personal debt than men (read, credit cards) and so their businesses start smaller and grow less rapidly.
Aiming to address this problem, we tried a couple of approaches but all our efforts were very time-intensive and helped just one business at a go. While it was very rewarding to see those companies flourish, we felt the problem needed bigger solutions in order to reach more women, especially as there weren’t many debt- and equity-free options (two things that put a huge burden on a small business) for funding out there. We finally hit upon the idea of adapting the crowdfunding model so women could use it to raise funds for a specific business projects.
MoolaHoop works with women entrepreneurs to define a project that will help support business growth. These women offer their customers, potential customers and friends and family “rewards” – their products or services or special experiences – in return for funds pledged up front. Sonal, for example, offered her supporters early order access to and special pricing on her new line, and unique opportunities such as naming items in the collection, participating in a design session, and having your child professionally photographed to appear in Tumbelwalla’s online marketing. Once the woman reaches her financial goal, she delivers the “rewards” to those who pledged. She neither owes any money nor relinquishes any ownership in her company as a result of the campaign.
In essence, the business owner is conducting a funding and marketing campaign to get her “crowd” excited about her project and the rewards offered. It’s a great opportunity to grow her network, as followers often share the campaign among their networks. And it can even be a great way to generate ideas and feedback on a new product or service offering.
If you are considering crowdfunding as a means to raise money for your business, you will first need to meet certain requirements:
- You have a customer-facing product or service: some examples include fitness studios, food products and clothing or accessories lines. If your customers are businesses, there are better marketing approaches. The same goes for professional services.
- You need between $1,500 and $20,000 to take your business to the next level: the best projects are ones where your customers see the benefit too. For example, you are a yoga studio and if you move to a bigger and better space you can offer more classes. In general, if your audience can’t visualize your end product and creative rewards are difficult (ie, websites and apps) crowdfunding won’t be easy.
- You have an established customer base and/or a strong social media presence: one of most misunderstood aspects of crowdfunding is the “crowd” element. You are marketing your idea to your network of customers, potential customers, professional contacts, family, and friends. If you do not have a strong existing network, you won’t be able to spread the word about your project. Remember, this is a business you are marketing, not a personal or charity cause. Of course, there are exceptions – if you have a really unique product and can get publicity for your crowdfunding project, you could be successful.
- Tell your story in a succinct yet engaging way.
- Build a presence on social media (Facebook, Twitter, Pinterest and Instagram) and/or have a solid email list.
- Engage your customers and potential customers regularly.
- Have a project your customers can get excited about that will help you grow your business.
- Offer creative, unique rewards – not products or services your customer can get anytime on your website.
- Be willing to ask people personally to pledge to the campaign. It’s not charity – it’s a business transaction.
At MoolaHoop, our overarching goal is to help women grow their businesses. We want to see more women like Sonal “reach for the crowd” and make their dreams a reality. We offer women complimentary conference calls where we discuss their business and their goals and offer advice and suggestions. If crowdfunding is not the right fit, we advise on other funding sources. To learn more, just email us at firstname.lastname@example.org.
Brenda and Nancy