Women entrepreneurs of New York: your city wants to invest in you.
New York City officials hope to support at least 500 women-owned businesses over three years. The only requirement is that they live in NYC.
The partnership was described as a “first-of-its-kind city-led crowdfunding program” aimed at helping women entrepreneurs access affordable capital in New York City. And it could point the way to more collaboration between cities, which view entrepreneurs as vital to their success, and crowdfunding sites that help these vital job creators raise funding—especially those who have struggled to access capital.
“Leveling the playing field for women entrepreneurs will help grow and diversify our economy, and strengthen our families and neighborhoods,” Mayor Bill de Blasio said in a statement. “With Kiva, we will help launch small businesses that might otherwise never get off the ground.”
That includes entrepreneurs like Truc Nguyen, the owner of Brooklyn-based Better Beast, who was among the first women to use the program. Her Kiva campaign seeks $10,000 to ramp up production of her protein-packed peanut butter products.
Kiva, a nonprofit, lets entrepreneurs crowdfund up to $10,000 in zero-interest loans—borrowers pay their lenders back the principal, but no interest. Like most crowdfunding sites, Kiva uses an “all or nothing” approach: if the campaign does not meet its minimum funding target, the entrepreneur does not receive any proceeds, including NYC funds.
The first 10% to 20% is critical in creating momentum for a crowdfunding campaign, acting as a signal that can attract a wider range of backers. Many small entrepreneurs struggle to gain that first backing, either because they don’t have a network with disposable income or they are hesitant to ask. Early support from the city should increase the likelihood of successful campaigns.
“This collaboration with Kiva.org is simple and smart,” said Alicia Glen, Deputy Mayor for Housing and Economic Development (pictured above).
If You Can Make it Here…
WE Fund: Crowd is part of WE NYC, a women’s entrepreneurship initiative launched by the City’s Department of Small Business Services in 2015 that connects women entrepreneurs to mentoring, advice and other resources. To date, it has engaged nearly 4,000 women, including through events like a summit focused on funding women entrepreneurs taking place on Nov. 21.
New York is an interesting test case for an innovative collaboration such as WE Fund: Crowd.
New York was recently ranked #1 in the annual Dell Women Entrepreneur Cities (WE Cities) Index, which looks at factors such as capital, talent and culture to assess a city’s ability to attract and foster growth of women-owned firms.
There are more than 880,000 female entrepreneurs in New York, an increase of 73% from 2012, according to the 2017 State of Women-Owned Businesses by American Express. These women employ some 650,000 employees and generate $138 billion in revenue.
These trends are mirrored nationally. The number of women-owned businesses across the country has grown by 114% over the past two decades, outpacing the overall business growth rate of 44%, according to the report. Women now own 39% of small businesses nationally.
Still, women have not yet reached parity with their male peers—not by a long shot. Across the country, women-owned firms account for just 8% of overall employment and 4% of overall revenues.
“One reason women-owned businesses are smaller than those owned by men is that they are under resourced,” says Geri Stengel, president of Ventureneer and a WE NYC mentor. “Access to capital is a key ingredient in every company’s success.”
According to NYC officials, 70% of women entrepreneurs in the city say access to capital as a major challenge to launching and growing their ventures.
Often, they only need small amounts to get started—about half of New York women entrepreneurs need less than $10,000, officials say. But it can be hard to get a small-denomination loan, and alternatives like credit cards and some online lenders charge high interest rates.
The Micro-Entrepreneurs at Home
When it was launched in 2005, Kiva focused on crowdfunding tiny loans of a few hundred or a few thousand dollars to microentrepreneurs around the globe, helping a woman buy a cow or sewing machine to create a livelihood, for example. Recognizing a need for such microloans in the U.S., Kiva began rolling out service to American cities a few years ago.
Since it began operations in NYC in August 2014, Kiva has helped fund 467 loans in the city and an additional 150 across New York State. Almost two-thirds of the loans have gone to women, says Katherine Lynch, manager of Kiva US Cities.