Women are Dominating Men in Crowdfunding, Science Says

Women are Dominating Men in Crowdfunding, Science Says

#GirlPower: Women are Dominating Men in Crowdfunding, Science Says

The investment industry is heavily dominated by men from either end, and that is no exaggeration. Only 9% of the decision-makers in venture capitalist firms are female, and the majority of the firms that receive funding are male-led at a whopping 98%. The same applies to the tech-dominated ranks of startups, where women are heavily underrepresented. There’s a subset of funding, however, that has upset this male-dominated system in recent years: crowdfunding. 

Crowdfunding: The Great Equaliser

A relatively recent report from Pricewaterhouse Coopers LLC (PWC) states that when it comes to crowdfunding, significantly more women are hitting their funding goals than men. The study included a sample of more than 450,000 from seed crowdfunding campaigns and found that women have a 32% more likely to meet their goals than men “across a wide range of sectors, geography, and cultures.” Those odds are doubled for women in Asia specifically, while North American women enjoy a 23% success rate, a few percentile points higher than the 20% success rate for men. 

But perhaps the most interesting thing about the study is that, from a numbers perspective, the outcomes should have been in favour of men. They were, after all, overrepresented in the sample, with only 55,000 out of the 450,000 campaigns being female-led. The overwhelming outcomes in favour of women should be taken as proof positive that women are, indeed, better at crowdfunding than men across the board. 

The authors credit the success of women to the new reach afforded by crowdfunding which “attracts, enables, and empowers far more female decision-makers – as project backers and micro-VCs – than within traditional finance.” They also point to the greater emotion and better inclusivity that embodies their communication which has greater appeal to male and female investors alike, over against the overly-formal business language that dominates the pitches of male-led campaigns. 

Collectively, women were able to raise $4 more per backer ($87 over the $83 of men), even though women entrepreneurs set funding targets that are way lower than the ones launched by their male counterparts. 

More Representation for Women Ahead

The study notes that this has several implications, one of which is that women are now in a position to bypass traditional barriers that have long prevented their participation in investment networks. Describing crowdfunding to be a more “gender-level playing field,” the study notes that this will likely change endemic biases in funding decisions that have historically limited access for women. 

Crowdfunding provides female entrepreneurs everywhere a voice in a traditionally male-dominated market, and a means to develop startups and projects that have a higher chance of being realised. This means that with crowdfunding, we can expect greater visibility for inclusive and female ideas in the near future. As the authors point out, 

"Supporting women-owned SMEs can boost economic growth in emerging markets and raise women’s participation in the labour force. A culture supportive of business startups is quite simply crucial for sustainable economic growth and job creation.”

The success of women in crowdfunding is eroding deep-rooted gender stereotypes about the capability of women in the marketplace and is one more item in the growing list of things that crowdfunding – as a means of funding and as a movement – is actively disrupting.