Why the Future in Crowdfunding is Female

Niki and Becca are two high school swimmers and entrepreneurs who have been successfully crowdfunded on Kickstarter being backed also by 3 swim Olympians: “We are very enthusiastic about the power of crowdfunding and would love to see more girls take advantage of it to start businesses early in life.”

Despite feeling underestimated due to their age, they are on a mission to elevate females in entrepreneurship and believe that entrepreneurship should be taught in high schools:

We want girls everywhere to consider getting into entrepreneurship or taking on some big mission and this is why we have created the world’s only female swim parka: we are proof that 16 is not too young to start thinking about business.

This success comes with no surprise, according to Regan Stevenson, assistant professor of management and entrepreneurship at Indiana University’s Kelley School of Business:

Crowdfunders think female entrepreneurs are more trustworthy than male entrepreneurs.

Source: Pexels.com

Indeed, a recent study from Kelly School of Business confirms that female entrepreneurs seeking initial investment through crowdfunding efforts are more successful than men when it comes to crowdfunding as the gender bias may make crowdfunding investors more likely to invest in new ventures led by women.

Professor Stevenson explains:

These judgments increase overall investment in female-led ventures over male-led ventures. When a crowdfunder holds high levels of implicit gender bias, the funder is actually more likely to invest in a woman because they perceive the woman as trustworthy. This is the opposite effect of what has been demonstrated in prior research in the venture capital setting.

In other words, women may not be disadvantaged but actually may hold an advantage because of stereotypical perceptions and implicit biases of others with the consequence that crowdfunding is an important new context for female entrepreneurs.

Through a sample of 416 projects, they examined the entrepreneur’s gender, the financial backing received and funding success and found that that women were more likely than men to have their Kickstarter projects funded. To discover why, they conducted an additional experiment with 73 amateur investors based in the eastern U.S.to find out that perceptions about trustworthiness facilitate financial backing and that implicit gender bias influenced funders’ willingness to fund female entrepreneurs.

Previous research in venture capital setting has advocated that women should downplay feminine characteristics to increase their chances of obtaining funding. This advice not only appears to be dogmatic, but our data shows it is simply bad advice for female entrepreneurs when they are obtaining funding through crowdfunding platforms.

Read the full study here.