The Boston Globe by Elizabeth Gehrman | October 22, 2015

Female entrepreneurs tend to be excellent at scoring big-time equity funding. So why don’t more of them go for it?

Last July, Stefanie Mnayarji of Boston took a line of breathable silk support-wear she’d developed to Kickstarter, aiming to raise $10,000 for her first production run. Within 16 days, her company, Luxxie Boston, had not only exceeded its goal by 220 percent but had also won scads of media attention and, ultimately, a loyal cult following of women who buy its slips and camisoles in every color and evangelize about them to their friends.

“It really caught fire,” Mnayarji says. The campaign gave Luxxie enough buzz that continuing sales should finance the company’s growth for the next two to three years. After that, when Mnayarji and her husband and cofounder, MIT research scientist Michael Gordon, are ready to take Luxxie to the next level and “make it a household name,” they plan to use crowdfunding again. This time it will be on an equity platform like CircleUp or AngelList, where accredited investors give larger amounts in exchange for an ownership stake in the company. “It’s a great way to democratize the venture-capital process,” Mnayarji says.

Countless women like Mnayarji have found grass-roots and — after proving their concept by gaining followers and racking up sales — equity support through crowdfunding sites. Women are the majority owners of about 36 percent of the businesses in the United States, and they make up 35 percent of project leaders on Kickstarter. Yet only about half that many can be found on equity crowdfunding sites — even though, according to CircleUp, women-led businesses this year met their fund-raising goals on the site 21 percent more often than those led by men.

Related: Ten reasons why more women are turning to crowdfunding

“Women are definitely catching up on rewards-based sites” such as Kickstarter, says Geri Stengel, president and founder of Ventureneer, a New York content marketing and research company, “but not yet on equity-based ones.”

Experts say women are particularly good at crowdfunding because of the skills needed to make it work. “Women are well organized,” says Stengel, “and project-management skills are needed. They’re really good at following up with people, and they’re good at networking,” from letting everyone on their contacts list know about the campaign, to reaching out to bloggers and social media, to attending a “gazillion” fund-raising events.

But perhaps the most pertinent skill women bring to the crowdfunding table, says Shari Worthington, the lead entrepreneur-in-residence at Clark University in Worcester, is the ability to weave a compelling narrative. “Women tend to be better at sales and marketing,” she says, “and that’s the way you succeed at crowdfunding. Women are good at telling their stories, and they tend to have better empathy. On the whole, they’re fundamentally more effective at connecting with people.”

So why aren’t more women taking to the Internet to raise funds for their businesses? For one thing, women-owned companies are likely to be smaller; the National Women’s Business Council reports that some 89 percent of the nearly 10 million women-owned businesses in the United States are sole proprietorships with no employees beyond the owner. Such companies are also more likely to be service-based, and lacking enough business role models and education, that means “a lot of women don’t see the potential to grow their businesses into large enterprises,” says Worthington. How many women over the years have offered freelance housecleaning, she asks — but it was a man who scaled the job up by starting Merry Maids in 1979. “The odds of being able to get to a larger size are significantly reduced if you don’t have some kind of background — either work experience or watching someone grow a company — or education,” Worthington says. But education needn’t come in the form of an MBA, she stresses. Many reputable schools have real-world or online entrepreneurship certificate programs that cost less than $10,000, and there are also entrepreneurship resource centers, workshops and seminars sponsored by the Small Business Association’s Small Business Development Centers, and continuing education classes at local universities and colleges. “To do it on your own without learning on the way is very difficult,” says Worthington. “You don’t know what you don’t know.”

Related: Why Equity Crowdfunding Is Good News For Women

Finally, while there are hopeful signs that women are inching toward parity — research from Babson College shows that three times as many of the companies receiving venture capital investment have a woman on their executive team today as did in 1999 — it’s no secret that most venture capitalists are men, and even online, gender bias still exists.

Companies like Luxxie Boston are a perfect example of how this can play out. “There’s a lot of great stuff out there, both products and services, that the world needs,” says Patricia Greene, the Paul T. Babson chair in entrepreneurial studies at Babson College, “but that male-dominated venture capitalist funds don’t recognize it as a need, including new technologies and products related to women and children.”

Recent sites targeted toward women investors should help to address this problem. Portfolia — in which Greene invests — welcomes small-scale angel investors with as little as $5,000 to lend and lets them provide feedback on the companies they choose. Once sites like this start to gain traction, women will have more potential partners helping their companies move forward, helping to level the playing field even further. “More women could grow businesses and create jobs and generate revenue,” says Greene, “but more important, crowdfunding can open doors for different kinds of people with different kinds of businesses to be able to say, ‘Let’s talk.’ ”

MINORITY WOMEN ENTREPRENEURS ON THE RISE

Gender and ethnic diversity is good for business.

In terms of racial diversity among women-owned businesses, there’s good and bad news. African-American, Hispanic, and Asian-American women are the fastest-growing groups of entrepreneurs in the United States, starting up to three times as many businesses today as they did in 1997. But, says Mary Godwyn, an associate professor of sociology at Babson College, “their numbers are still relatively small in absolute terms.”

View: Crowdfunding To Narrow The Gender Gap in Venture Capital

Access to business capital is increasing, in part because of crowdfunding. But according to a 2014 report by the Center for American Progress, women of color still have a harder time getting startup capital, and African-American women and Latinas tend to found businesses in the lower-paying health care and social services fields rather than in high tech or professional services. In addition, minority women say they lack role models, feel excluded from networking, and suffer from stereotyping.

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