The Crowdfund Act’s Impact on Women-Owned Businesses’ Access to Capital

Brandt, Elizabeth N.

Women-owned businesses make up a significant portion of businesses in the United States and provide one of the most important growth opportunities for the United States’ economy today. However, female entrepreneurs face on-going challenges in gaining access to capital through traditional capital-raising mechanisms such as venture capital or bank loans. The Obama administration heralded the CROWDFUND Act as a boon for women-owned businesses. Many believed that regulation crowdfunding, enabled through the Act, would democratize potential investors in small businesses, thereby increasing the number of investors willing to provide capital to female entrepreneurs and their businesses.

This Note provides the first quantified examination of the results of the first nearly eight months of regulation crowdfunding with respect to women-owned businesses. This Note additionally explores the results of regulation crowdfunding as reported by others. Ultimately, this Note determines that, at least in the first months of regulation crowdfunding, women-owned businesses did not take advantage of regulation crowdfunding in any meaningfully increased way compared to traditional capital-raising mechanisms. This Note proposes several ways in which the government could further support women-owned businesses, such as implementing a simple reporting mechanism to better track the capital-raising efforts of women-owned businesses and developing a pilot program of financial advisors available to founders and management of women-owned businesses seeking capital.

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Columbia Business Law Review

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November 22, 2019