It's depressingly, persistently difficult to raise money while female. A recent study found that only 2.7 percent of the small businesses that received venture funding between 2011 and 2013 were run by women. But the rise of crowdfunding has started to open some new financing doors for women entrepreneurs, in part because platforms like Kickstarter tend to attract women as investors too. Alicia Robb, a senior fellow at the Ewing Marion Kauffman Foundation, explains why that can help--on multiple fronts.

Why is crowdfunding so important for women?

Women make up 44 percent of investors on Kickstarter, according to research by Kauffman and the Hebrew University of Jerusalem. That's a better balance than the VC or angel investor community can lay claim to. It also demonstrates a ready audience for products made by women, a number of which are specifically targeted at women. For example, Willa founder Christy Prunier raised $1 million on CircleUp in 2012 to fund her natural skincare company, which she started with (and named after) her then-12-year-old daughter. Another parent-and-child duo, Sustain co-founders Jeffrey and Meika Hollender, used CircleUp to raise $600,000 for their socially conscious condom company, which markets primarily to women and donates a part of its profits to improving women's reproductive health. And Thinx's co-founders, sisters Miki and Radha Agrawal and Antonia Dunbar, raised almost $85,000 last year on Kickstarter and Indiegogo for their underwear and feminine hygiene startup.

But what should entrepreneurs be wary of when crowdfunding?

Crowdfunding is a very broad term, so first figure out what type of financing you actually want to raise--donations, loans, or equity. If your goal is to raise external equity, watch out for new regulations from the Securities and Exchange Commission. It's still not clear when they'll be finalized, but some of the proposed restrictions include a $1 million cap on funding raised within a 12-month period, and limitations on the amount that can be raised from individual investors.

There are new alternative financing platforms sprouting up seemingly every day, so make sure you choose the right one for your fundraising needs and business focus. For example, CircleUp and Crowdfunder help startups raise bona fide equity, whereas Kickstarter and Indiegogo don't sign up actual investors; instead, they deal in rewards-based donations from customers. Then there are peer-to-peer lenders like Funding Circle and Lending Club, which facilitate small-business loans rather than investments or donations.

Whichever form of the crowd you tap, make certain that you understand your investors' expectations and can follow through.

Could this eventually level the financing playing field for women?

Crowdfunding's immediate benefits are twofold: It increases the participation of women on the investing side, and it provides more financing to women entrepreneurs. But it also could have long-term, subtler benefits for women looking to start businesses in male-dominated industries, such as tech or video gaming. Males are even less likely to invest in women-owned businesses in these industries, but crowdfunding has made up the difference for Cheryl Kellond, who raised $400,000 on Kickstarter to launch a sports watch company, Bia Sport. Now she's taking on established GPS fitness-gadget makers run by men. And then there's Julie Uhrman, founder of video game console-maker Ouya, who raised $8.6 million on Kickstarter--the platform's third-most successful campaign to date. That sort of outcome suggests crowdfunding's potential impact on the financing playing field.

Find your audience

"What I love about crowdfunding is, it's a proof of concept," says Miki Agrawal of Thinx. Her New York City startup makes fashionable underwear for menstruating women to wear as an alternative to tampons and pads--and for every pair of undies it sells in the United States, it donates seven washable, reusable pads to women and girls in Uganda. But topics like tampons and menstruation aren't an easy sell to male VCs and buttoned-up investors, so Agrawal and her co-founders took to the crowd. Thinx easily surpassed its goals on Kickstarter, and a subsequent Indiegogo campaign raised almost twice its initial ask.

Published on: Dec 1, 2014