- A new study shows that female crowdfunders are 5% more successful than their male counterparts in achieving funding targets.
- The success of women at securing finance via crowdfunding points to bias in traditional funding channels.
- Crowdfunding presents a new, gender-neutral option for women looking for start-up capital.
Did you know that women are better at crowdfunding than men? That’s the finding from PwC’s joint research with The Crowdfunding Center and the focus of a new report, Women unbound: Unleashing female entrepreneurial potential.
Seed crowdfunding, in which money is raised to fund the creation or launch of a new business or product, has become incredibly prolific in recent years. The nine biggest global platforms alone raised over US$767 million in 2016.
Analysing a massive 465,000 of these campaigns across 2015 and 2016, we found that campaigns led by women were 32% more successful – and not just across traditionally ‘female’ areas. The advantage holds true even in sectors historically dominated by men, such as technology.
Globally, 22% of campaigns led by women met their funding goals, compared to 17% of men. In Australia, 20% of female-run campaigns met their target, compared with 15% of male-run campaigns. In fact, every geographic region showed females have greater success at meeting funding targets than men do.
The success that women are having in hitting crowdfunding goals leads to interesting questions. If women are better than men at attaining financial funding via this avenue, why aren’t they doing so when it comes to traditional funding methods?
As the study points out, most decision-makers in venture capital are male. Only 7% of partners in the top 100 firms are female, and “this leads to biases in funding decisions with research indicating investors prefer pitches from attractive male entrepreneurs even when the content is similar to that of women’s pitches”¹.
Study after study points out the barriers to women entrepreneurs accessing capital. Crowdfunding is providing a path to the money.
Balancing the inequalities
Crowdsourced funding is balancing out the gender-politics at play for female-led startups. For one, the investors are, unlike in the VC world, not all men. Those giving to crowdfunding campaigns tends to be a fairly even mix of men and women and, while they behave differently in terms of how much they give, the equal representation works in everyone’s favour.
Women get the extra edge, it seems in part because they tend to use “more emotional and inclusive language in their videos and pitch descriptions than men”². Shying away from formal business language works in their favour as it tends to be negatively correlated with raising money.
The success of this approach and emotional connection in pitches is consistent with the values, skills and capabilities most sought after across Australian business – for example those of being purpose-led, storytelling, empathy and customer experience-led design. A recent global startup report indicates that of high growth startups experiencing 200%+ growth, 75% were founded by women³.
Asking for a raise
Where women fall short in our study – and in particular, the Australian findings – is when it comes to the amount raised.
Whilst women are more successful than men when they give crowdfunding a go, men are substantially more likely to ask for higher amounts and they’re earning more money as a result. Globally, 89% of campaigns that raised over US$1 million were led by men.
Additionally, while globally women pledge more money than men, in Australia the opposite is true, where the average amount promised was US$116 compared to the US$75 offered by women alone.
It’s unclear why this is, however one factor may be the gender pay gap in Australia whereby women still earn between 16% and 28% less than their male equivalents4, which may contribute to the lower investments by women.
There is still a way to go to eliminate the inequalities in funding female entrepreneurs. The good news is that crowdfunding presents a new and successful avenue for women to utilise.
With support from government, the business community and educators, and by encouraging women to have confidence in their talents, here is a real opportunity to make significant change.
Find out more about women and crowdfunding by downloading Women unbound: Unleashing female entrepreneurial potential.