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A percentage of small business owners, despite their preparation, end up failing. A lot of them are unsuccessful due to a lack of financial backing. After exhausting all of their immediate options, like getting investments from loved ones, being turned down by banks for loans, and spending all of their start-up capital, small business owners are beginning to educate themselves on financing their businesses using crowdfunding.

Crowdfunding is the use of lots of small contributions from people who believe in the startup’s vision. Internet platforms like Kickstarter have already raised over $349 million in startup costs to date and help small business owners pitch their ideas to the public for a small percentage of the proceeds. To attract backers, the startup business owner uses a reward program. This reward program can be offering a stake in the business, giving a physical gift or product, offer shares in the company in hopes the company will turn a profit and make them money. Depending on the project, some people even offer donations or allow investors to add their input based on how much money they invest.

According to statistics, women are 32% more likely to have success in crowdfunding than men. This is due to the public’s desire to have a more diverse market of venture capitalists. Women are also more likely to create an emotional connection to potential clients, whereas men have a more practical business approach. Because every startup does not meet its goal, be sure to have a solid pitch before signing up. Every project doesn’t receive funding, so having a solid pitch is key.

Crowdfunding is a great way to finance a startup company, especially after exhausting other investment options. In addition to having a reward system, it is important to have a pitch that stands out. Not only does the product have to fulfill the market’s need, but the story behind the business must also attract investors. Family members who have already invested can also share the crowdfunding project to attract additional investors. Building a larger online network will raise the probability of earning the financial backing necessary to run a successful startup.