Entrepreneur Crystal Gornto’s first attempt at raising money for her startup through crowdfunding didn’t pan out.
Kickstarter rejected her proposal because it didn’t fit the popular crowdfunding platform’s criteria.
Gornto, of Frisco, Texas, then turned to a new crowdfunding site for female entrepreneurs called MoolaHoop. Since launching her campaign in August to fund HeartStories, an online and mobile community to empower women, she has raised $10,000.
“It’s been incredibly affirming,” Gornto said.
Dallas-based MoolaHoop, which launched in July, aims to address a major obstacle for women entrepreneurs: raising capital.
When it comes to securing funding, female business owners typically get less than their male counterparts, according to numerous studies and reports. Female entrepreneurs, for instance, historically have received little venture capital backing – as little as 4 percent of the total available, according to the Kauffman Foundation.
The funding gap has implications for growth and success.
Female entrepreneurs are almost twice as likely as men to discontinue a business because they are unable to secure financing, according to the 2012 Global Entrepreneur Monitor U.S., issued by Babson College and Baruch College. In fact, trouble getting capital is the No. 1 reason cited by women for discontinuing a business, according to the report.
MoolaHoop co-founder Brenda Bazan saw an opportunity to narrow the funding disparity by using crowdfunding, which has become a popular way for some entrepreneurs to raise money for new products or projects.
“There are so many people around the country who understand the problem that women are being left out of the capital market,” said Bazan, who worked for a nonprofit that provided microloans to women in Africa and the Middle East. “It was heartening when every time we brought this forward, we heard, ‘This is a great idea.’”
Like Kickstarter, MoolaHoop is a rewards-based fundraising platform. In exchange for a financial pledge, backers receive gifts or items related to the project.
In Gornto’s case, gifts range from a T-shirt to hors d’oeuvres receptions, depending on the amount of the donation.
MoolaHoop takes a 5 percent fee for each successful fundraising campaign. If a campaign fails, MoolaHoop does not take a cut.
While Kickstarter has an all-or-nothing fundraising model, meaning a project must meet its monetary goal within a certain timeframe to receive the money, MoolaHoop allows entrepreneurs to set funding milestones.
An entrepreneur, for instance, can set fundraising milestones in $10,000 increments for a $50,000 campaign. When each goal is met, the entrepreneur receives the money.
The campaign then can continue as long as time remains.
This set-up lowers a barrier that prevents some women from putting their ideas out for public consumption because it eliminates fears about failure, Bazan said.
“Putting a $50,000 goal but getting $40,000 and failing, it’s terrible,” she said.
Besides helping women raise money, MoolaHoop wants to create an online support community for female entrepreneurs. The platform is building a network of mentors and other resources to help women build and grow their businesses, Bazan said.
Besides reward-based fundraising sites, crowdfunding based on equity is gaining momentum.