Women Faring Better with Crowdfunding

Women’s odds of successfully getting crowdfunded are superior to those of men, according to new research.

The study Gender Dynamics in Crowdfunding: Evidence on Entrepreneurs, Investors, and Deals from Kickstarter revealed women entrepreneurs had a crowdfunding success rate of 69.5 percent, compared to 61.4 per cent for men.

Women raised less money overall, with the average funding goal for women-led projects about $6,300, compared to $9,400 for men, but when the researchers looked at projects identical in category, subcategory and goal amount women still were more successful than men.

Researchers from The Kauffman Foundation and the Hebrew University of Journalism examined fundraising efforts on crowdfunding platform Kickstarter between April 2009 and March 2012. The data included 16,641 successful projects, 4,304 ongoing projects, 4,128 failed projects, 22,274 entrepreneurs, and 1,108,233 investors.

“One interesting finding is that female entrepreneurs are more likely to attract female investors – when we examine the gender of the investors of female and male led projects, we find very different investing patterns,” the report said.

“While more than 40 per cent of the funds of female investors were invested in projects by female entrepreneurs, only 22.5 per cent of the male investor funds went to female led projects.”

The more female dominant a project was, the higher the share of female investors.

Projects with two females had a 63 per cent share of female investors, which dropped to 57 per cent for one female, 52 per cent for a team with more females than males, 51 per cent for a team with more males than females, 44 per cent for projects with one male, and 40 per cent for teams with two males.

The opposite was also true with a larger the share of male investors the more male-dominated a project was.

Overall women made up about 35 per cent of the project leaders and 44 per cent of the investors on the platform.

The report noted past studies which found that women raised significantly lower amounts of equity than men at startup and significantly lower amounts of both debt and equity in the years following startup, even controlling for firm size and the level of initial capital.

Yet the study did not attribute this solely to lack of supply.

“Several studies point out that women are less likely to seek external financing, and, when they do, they raise smaller amounts. These are demand side constraints, which raise the possibility that women have different motivations and goals for their firms than men, or, alternatively, that they are more risk averse and concerned with maintaining control,” the report said.

“While  crowdfunding  has  the  potential  to  ‘democratize’  the  private equity market by serving as a means for both women entrepreneurs and women investors to participate more fully, our initial analysis of Kickstarter data suggests that this currently is not the case.”

It follows a study earlier this year which asked potential investors to rate a series of identical pitches. Only 32 per cent of people said they’d fund the woman, compared to 68 per cent who said they would fund the man.