Karen Cahn and iFundWomen to Refresh the Startup Fund Raising Resolution of Crowdfunding
Karen Cahn is a pioneer in the digital media space and was an early Google employee where she spent 10 years leading various monetization teams in search, display and video. Most recently, Cahn spent three years as General Manager of AOL Original Video and was responsible for business strategy and strategic partnerships. In this role, she built AOL’s female creative economy in video and as a result, nabbed AOL its first-ever Emmy nod.
Prior to AOL, Cahn spent ten years at Google and YouTube, where she held various leadership roles in video, search, and display advertising. Most notably, Cahn started the Branded Entertainment business at YouTube, where she concentrated on the marriage of big brands and video content.
That experience led Cahn to realize the majority of crowdfunding platforms were unapproachable for women and people of color. This light bulb moment inspired Cahn and her co-founders to launch their own crowdfunding platform, iFundWomen, with the goal to drive funding towards female entrepreneurs and close the gender funding gap in venture capital.
Cahn’s Vision: What’s Happening with Women and Their Startups?
Karen Cahn’s goal is to level the playing field for female entrepreneurs. It is going to take years, but that is what she does. Cahn is working with high-performing entrepreneurs and great ideas who are working hard but cannot squeeze any more money out of their personal networks. It is her mission to get more money into that pool. “Women are the fastest-growing entrepreneurial sector, and women of color are the fastest-growing sector within that, but we’re starting from ground zero in terms of fundraising. Women currently get two to six percent of venture funding, and women of color get 2 percent—it is horrifying. If we try to get a bank loan, guess what? We get smaller loans for higher rates than men do, and it’s even worse for women of color.” Speak on an interview, Cahn advices women, “Do not take a second mortgage out on your house for your startup. Do not get a loan to fund your prototype. There’s nothing worse than your startup failing and then owing money to the bank on top of it.” She is brutally honest with every female entrepreneur she talks to, and that is how Cahn
Facing harsh reality, what would Cahn recommend for woman who has ideas and want to make it big? “Do not quit your day job to become an entrepreneur, overnight success takes 10 years”- stressed on a Digital Trends interview, Cahn claimed that while at the idea stage, you will not know if this is going to be a business yet, until your product or service is being purchased, it is a hard journey, and the prep work is everything. First, do research, to know if your product is on demand, do people want it? If the answer is yes. Then second, start looking for ways to raise debt free capital through online fundraising or crowdfunding- which would allow you to prove demand for your product or service before investing in supply.
What is iFundWomen?
Fed up with the systemic biases that women face when trying to get funding for their businesses, Karen Cahn launched a crowdfunding platform called iFundWomen to drive much-needed capital to women-led startups and small businesses. Since November 2016, funders have backed nearly 100 startups and helped raise close to $600,000. Cahn sat down with Jessica Abo at the Caravan Stylist Studio in New York City to talk about crowdfunding and shared her advice on how to launch a successful campaign.
Today iFundWomen has a global platform available to startups in 25 countries, and five U.S.-based cohorts, with two recently launched in Newark and Boston. For each cohort, the team partners with city leaders and investors to activate support for entrepreneurs in their community. According to Cahn, iFundWomen is different because it takes a very human, hands-on approach to crowdfunding.
The iFundWomen team is committed to supporting women on their entrepreneurial journey. She believes that more women need to be taught about raising cash rounds as opposed to pursuing venture capital or worse, taking out a loan, in the early stages of their business. According to Cahn, “92% of startups fail. You don’t want to fail and have to worry about having a loan to pay back.” When thinking about her experiences she added, “Don’t spend years of your life perfecting a product. The most important thing is speed to market. Raise a round of cash. Get your product out there quickly. Get the feedback. Iterate.”
Why Crowdfunding Should Be a Core Strategy for Startups?
Is it true that crowdfunding means giving away equity in your company? Not really, Rewards-based crowdfunding platforms, like iFundWomen, allow you to sell products or services in exchange for cash, similar to an e-commerce transaction. This means you are keeping 100 percent of your company, and you are not giving away equity in your company. Nor is it a loan–you do not have to pay the high-interest rates women receive on small business loans.
According to Cahn, crowdfunding should be a central part of your business strategy.
A crowdfunding campaign’s work includes: four weeks of pre-planning and four to six weeks of full court fundraising. Whether you are an early-stage startup trying to prove there is a market for your product or an existing business looking to fund your growth, a crowdfunding campaign should be a key part of your go-to-market.
You can crowdfund and grow your business at the same time, and if you work hard enough, you can leverage your campaign to create long-lasting lucrative partnerships for your business. That’s the crowdfunding dream come true!
Crowdfunding validates product-market fit; investors view a crowdfund as an initial gate to prove there’s a market and regularly require a crowdfund before investing venture capital dollars. Crowdfunding can also help refine marketing your marketing strategy and de-risk your launch: people get to know you and your business/product and give you real world feedback.
Launching or growing your business is all about maximizing your opportunity and limiting your risk. The single most efficient way to do that is through crowdfunding.
What Are Some Crucial Moves for A Successful Crowding Campaign?
Equipped with a wealth of knowledge about raising funds and doing business, Cahn continued to provide great tips. Below are some additional Do’s that she shared to help women have a successful crowdfunding campaign.
#1: Do have a digital media presence
Your website and social media channels must be launched, and the messaging must be on point because people will judge you. It needs to convey exactly what you do very simply and be on brand.
#2: Do talk consistently about your business and prepare people for your campaign
Talk about your business so much that when people see your campaign, they know that you are consistent. Set your campaign’s launch date months in advance and let your audiences know that it is coming. Be sure to set a manageable length of time for your campaign (30 days is recommended) because you will be promoting it 24×7 days a week.
#3: Do have a clear goal and action plan to raise money every day
If your goal is to raise $30, 000 in 30 days then you must have a goal to raise at least $1000 a day. You must promote your campaign every day via email, social, and most importantly in real life.
#4: Do have a tight elevator pitch
You should always have a 30 second elevator pitch ready at all times that communicates who you are, your expertise, the problem that you are solving, your company mission, how your product is solving the problem, and then wrap it up with an ask. You never know who you are going to meet in an elevator who will support your project.
#5: Do create a professional video that conveys your pitch
Your campaign’s video is the funder’s first view into you so it must be great. iFundWomen has a video production arm to help women tell stories about their brand.
#6: Do have family and friends ready to contribute to your campaign within the first 48 hours
Everyone is not comfortable asking loved ones for money, but it is critical to have them on board early. iFundWomen allows users to take advantage of an “incognito” phase. It is a private link that allows women to start crowdfunding a week before their campaign goes live so that they have supporters already on board when they launch.
#7: Do create scarcity
Offer an exclusive reward with limited availability. If you take advantage of iFundWomen’s incognito phase, you can pre-sale the reward. Promote your rewards heavily so that they can be sold out early.
The Bottom Lines
As a working woman herself, Cahn understands thoroughly women’s struggles building up their own business. For such reason, iFundWomen is more than ever receiving a lot of attention, giants like Visa, PNG or even Unilever are contacting the company for grant programs. Apparently, Cahn’s work is making grand impacts!