Research: Women More Successful Than Men on Crowdfunding Platforms

Assistant Professor of Management at New York University, Jason Greenberg and Assistant Professor at the Wharton Business School at University of Pennsylvania, Ethan Mollick recently released research titled, “Leaning In or Leaning On? Gender, Homophily, and Activism in Crowdfunding,” that revealed evidence that women are turning to crowdfunding platforms more than men.

Jason GreenAccording to the abstract of the research document, “Female founders seek and receive less startup capital than male entrepreneurs. One reason for this disparity is a lack of female representation among funders of startups, and a potential solution is to increase the proportion of women in decision-making roles. Both the problem and the solution implicitly rely on homophily – that women will support other women given a chance. However, a lack of clarity over when and how homophily influences individual choices makes it uncertain when better representation is actually advantageous.”

“Using data from crowdfunding, we empirically examine whether higher proportions of female funders lead to higher success rates in capital-raising for women. We find that women outperform men, and are more likely to succeed at a crowdfunding campaign, all other things being equal. Surprisingly, this effect primarily holds for female founders proposing technological projects, a category that is largely dominated by male founders and funders.”

Previous research measured the following:

  • Whether the project was featured on the crowdfunding platform
  • Number of spelling errors the pitch has
  • How much the campaign team updates their backers within the first three days of the campaign

kickstarter-logoThe case study explained how, on Kickstarter, about two-thirds of women-led projects reach their funding goals, which is compared with a little less than one-third of male-tech ventures. The research showed that women are 13% more than likely to meet their goals on the crowdfunding giant. This was proven after examining 1,250 projects within five categories that were seeking $5,000 in funding between 2010 and 2012.

The documentation then added, “As expected, female founders are more likely to found projects in fashion and publishing, followed by film. Female founders are also underrepresented in technology and games, consistent with expectations.”

In conclusion the researchers noted, “We believe the findings of this research are valuable to both scholars and policy makers. First, descriptively, they suggest that gender disparity in the percentage of female backers relative to males exists on the internet as is the case in formal finance.”

“However, relative gender ratios are far less skewed online. Second, as speculated in the literature concerning the promotion of women to decision-making positions, the presence of female backers explains some of the comparative success of female-founded projects.”

Ethan Mollick“Rather than being driven purely by better numerical representation of women in a given industry category, the success of female founders seems to require a subpopulation of female backers that disproportionately support women founder in areas in which women are historically underrepresented – activist choice homophily. In this way, our research demonstrates the power of the Internet to help ameliorate pervasive structural constraints by affording access to such backers that may be in short supply in a local social area. It also reveals the socially conscious and strategic nature of choice homophiles female backers in our research setting.”

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