Women Entrepreneurs, Crowdfunding, and Access to Capital

Last month PwC and the Crowdfunding Center partnered on a report regarding women and crowdfunding. Referencing data collected by the Crowdfunding Center that analyzed 450,000 rewards based crowdfunding campaigns, the document entitled “Women Unbound: Crowdfunding – Unleashing Female Entrepreneurial Potential,” showed that women-led campaigns reached their funding target more often than male-led campaigns. In the world of female founded companies this is encouraging news. Access to capital is vital for any startup and the thesis that crowdfunding may be a key catalyst in empowering female entrepreneurs is quite promising. Yet data persists indicating that venture funded firms are far more likely to be founded by male entrepreneurs.

Crowdfund Insider recently reached out to Manoj Kashyap, PwC Global Fintech Leader and Barry James, CEO of the Crowdfunding Center for additional insight and commentary on women and crowdfunding. Our discussion is below.


The data from the PwC / Crowdfunding Center report was encouraging regarding women and rewards based (seed) crowdfunding. Why are women faring better than men in some respects?

Manoj Kashyap: This analysis, of two years of seed crowdfunding data (2015-16) from nine of the biggest crowdfunding platforms globally clearly shows that female seed crowdfunders are outperforming male crowdfunders when it comes to achieving their finance targets globally and when broken down by all regions, markets and sectors.

We feel there are two main reasons why female-led campaigns outperform male-led campaigns and these are firstly, the gender balanced nature of the crowd, and secondly, the more appealing nature and style of female pitches to the crowd.

If we consider traditional financing channels, one of the most pertinent reasons that women-owned-or-led businesses receive much less funding their male counterparts is the result of the complete dearth of women in the traditional financing world. Let’s take a deeper look at the world of Venture Capital as an example. Recent research found that most decision-makers in the venture capital industry are male; in fact, just seven percent of partners of the top 100 venture firms globally are women; and of 2,300 venture and micro-venture firms, only eight percent of partners are female. (1)

The fact is that each of us is programmed with blindspots, and whether conscious or unconscious we are drawn to people like us or who remind us of ourselves. Ultimately, this leads to biases in funding decisions. With research indicating that VCs with only male partners are more likely to invest in male led projects or business (2) and that male entrepreneurs are 86% more likely to be venture capital funded than their female counterparts. (3)

Crowdfunding presents a completely different decision making landscape. The fact is the crowd is much more gender balanced – and just like the male dominated world of decision making in traditional financing channels is negatively influencing female finance seekers, in crowdfunding it is positively influencing and one of the reasons that has contributed to female seed crowdfunding success.

With crowdfunding you are telling the story and building a relationship rather than just appealing to a need and women tend to be much more relationship focused so this often comes more naturally than for men. And this translates to female crowdfunders using more emotive and inclusive language in their campaign pitches and videos. Which in turn translates to crowdfunding success as this is more likely to resonate with the crowd (male and female) than the use of more technical business language which is much more predominant in male-led campaigns (and research shows) negatively correlated with backer funding.

So women have a higher success rate than men. What types of campaigns are they finding success?

Manoj Kashyap: In general terms, female-led seed crowdfunding campaigns achieve higher funding success rates than male-led campaigns across all types of campaigns.

Let’s however take a look at a few interesting examples, for example, from sectors that are often considered more ‘masculine sectors’.  Despite their complete under-representation in the technology sector they still obtain more success than male crowdfunders. Campaigns for technology products and services where we see nine male seed crowdfunders for technology ventures to every one female crowdfunder, 13% of women were successful in achieving their funding goal compared to just 10% of men. Similarly, in the digital technology sector, where there are three male-led campaigns to every one female-led, women achieved a 16% success rate compared to just 9% for men.

If we consider representation or individual backer funding dollar amount as measures of success female crowdfunders do best with education focused campaigns.  Here we see 40% of initiated campaigns led by women (compared to 28% overall globally) and we see women-led campaigns achieve on average 2.6 times more per individual backer pledge (USD$188.) compared to male crowdfunders in this sector (USD$72.).

Globally, across all sectors women do on average also achieve higher individual pledge amounts, but only .5 times more than their male counterparts. Globally, they also obtain USD$87. on average per individual pledge, less than half the USD$188. raised by female crowdfunders for education focused campaigns.

In overall terms, when we consider obtainment of their funding target as the core measure of success, as was the case in our Women unbound report, women perform best with campaigns in entertainment and media sector, with 30% of female led campaigns obtaining their finance target compared with 23% of male-led campaigns.  This sector however also provides the highest success rate for male-led campaigns.

Recently, Crunchbase published a report on women founded companies. In Seed rounds, women stood at 15%. In VC  rounds, women stood at just 11%. Why the difference between rewards and investment?

Manoj Kashyap: This builds further on the points raised to question one.  With traditional investment channels women are not represented adequately in decision making. What is different with seed crowdfunding is that anyone, anywhere in the world can be part of the crowd.  Ultimately seed crowdfunding provides the opportunity for anyone in the world to ultimately become a ‘mini-vc’.  Firstly this means that you’ve got much better levels of female representation in the ‘crowd’ so decision making is not skewed towards one gender, and secondly in this world the quality of the pitch and the product or service being pitched is often much more important than the person doing the pitching.

The ground rules are also different for seed crowdfunding as compared with traditional marketing and selling. With crowdfunding you are telling the story and building a relationship rather than just appealing to a need. Women tend to be much more relationship focused so this often comes more naturally than for men. And this translates to female crowdfunders using more emotive and inclusive language in their campaign pitches and videos. Which in turn translates to crowdfunding success as this is more likely to resonate with the crowd (male and female) than the use of more technical business language which is much more predominant in male-led campaigns (and research shows) negatively correlated with backer funding.

What needs to be done to improve the overall funding ability of female founders?

Manoj Kashyap: The reality is that today, we find ourselves in the situation that the majority of decision makers in funding decisions are male. Neuroscience shows that we are all unconsciously programmed to naturally select people in our own image or who we feel are like us.  For example, one Harvard research study showed that investors prefer pitches from attractive male entrepreneurs even when the content is similar to that of women’s pitches. In this day and age, we also still remain challenged with the impact of varying levels of assumptions and outdated stereotypes across the world, be they: that women are not interested in entrepreneurship or as good at it that are both consciously and unconsciously infiltrating decision making.

So a huge amount needs to be done on awareness with financing decision makers.  Firstly creating greater awareness of female entrepreneurship success stories and role models and the returns they can offer and secondly creating greater awareness of the unconscious biases and blindspots that are likely influencing decision making and how to mitigate for them.  For example, financial institutions, banks and VC firms can measure and audit, on at least an annual basis, lending and funding patterns from a gender perspective to unearth potential systemic biases, they can also undergo training to support them consciously adjust your perceptions of risk when it comes to investing in women entrepreneurs and businesspeople and actively create more funds to invest in startups run by women.

The lack of awareness piece also extends to female founders, who often have less awareness about knowing where to go to get access to funding, are often more hesitant about pitching and asking for money, are often less networked and often less confident than male founders. Likewise for women we need to build more awareness of female success stories, to create greater awareness of and encourage more women to seek out and participate in women-focused incubators, accelerators and platforms such as AllBright and The Crowdfunding Center’s business funding accelerator for women so that they can become more networked, more confident and get the access they need.

An ambition to foster greater levels of awareness is why PwC specifically joined forces with The Crowdfunding Center to conduct this research and release this report because we hope the weight of our global brand and the reach of our network of firms (157 countries) can have an impact here. In the case of this report to in particular inspire, motivate and empower more budding and established female entrepreneurs across the world to explore and get involved with seed crowdfunding as a potential financing channel. But also to ultimately inspire female entrepreneurs confidence in themselves and their business ideas generally and mitigate the effects of aforementioned outdated assumptions and stereotypes generally.

We have also dedicated a full chapter of our Women unbound report – The way forward – to specifically identify actions that governments, funders, business advisors, educators, entrepreneurs, women and men can all take to support better levels of female founder funding and success.

[clickToTweet tweet=”We are seeing the beginnings of a major shift opening up entrepreneurship to everyone #Crowdfunding” quote=”We are seeing the beginnings of a major shift opening up entrepreneurship to everyone #Crowdfunding”]

What needs to be done to get more women into the investment crowdfunding space?

Barry E James: It’s best to see this not in isolation but in context.

We are seeing the beginnings of a major shift opening up entrepreneurship to everyone. Even starting today, this will take almost a generation and involve a shift in attitudes and perceptions requiring a step change right along the chain, from education forwards.

When you look at how business people are made it’s a lot about experience, exposure and skills – as well as ideas and vision. So we need a more holistic approach – and to turn things on their head, the right way up. As leading VC Julie Meyer often observes, finance, whether equity or otherwise, is a service industry to businesses – not the other way about – and equity / investments is just a part of that.

Women are doing better not just because they’re fitting better into this new more open world but because it’s more conduce to and supportive of who women are. The old world was built around men, the new is not. The basis of decision making in seed crowdfunding is entirely different. As you know, funding decisions are made not just by a different group of people but also on an entirely different basis – about the vision, the proposition – not just the yield for an investor. There is clearly no room for bias here. We will no doubt see a new generation of businesspeople and entrepreneurs as a result – and it looks like they may be more female than male. Nor will they compromise, they’re grounded into family and life outside the office in a way men typically are not. This in itself will have a major impact, over time. How can we get more mighty-oaks is a question that inevitably involves seedlings and time.

In the shorter term the answer we reached in the frame of the report is twofold: Challenge and Support. Organizations and institutions from governments to business, and especially funders, challenging themselves as to how their decisions are made. On what basis and with what bias – known or otherwise. What they’re doing, and should start to do, to actively identify and exclude bias.

Then support: Awareness is key but just a starting point. As with supporting and encouraging women into the STEM subjects (Science Technology, Engineering and Maths), which makes it ‘normal’ rather than odd or unusual for a woman or girl to make that choice, we need to make the same changes, most probably via the same or similar means. We need to add B, Business, to that list, and learn from the experience. We need to recognize that seed crowdfunding has different DNA, which is what makes it a level playing field from the off, and leverage that too.

But most of all right now we need to step back and to challenge – first our own ideas, assumption and perceptions, in the light of what we now know. Then we need to challenge, in as positive a way as possible, our organizations and institutions – and keep challenging them until the job is done.

This is the beginning of a long, and transformative, journey. But a lot can be achieved in this the first stage, the shorter term, if we want it.

1.Women in Venture report, 2016, source: https://techcrunch.com/2016/04/19/the-first-comprehensive-study-on-women-in-venture-capital/  
2.Women Entrepreneurs: Bridging the Gap in Venture Capital, The Diana Project, 2014. Source: http://www.babson.edu/Academics/centers/blank-center/global-research/diana/Documents/diana-project-executive-summary-2014.pdf  
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