The crowdfunding phenomenon, which has dramatically changed the way businesses and individuals raise capital could now become a catalyst for the success and growth in female entrepreneurs and female-owned businesses.
A recent study has revealed that crowdfunding- an internet-enabled provision of financial resources- not only reduces barriers faced by female funders/entrepreneurs seeking capital, but shows that female led pitches are out performing male led pitches.
Jason Greenberg of New York University and Ethan Mollick of the University of Pennsylvania’s Wharton School, found that women-led-ventures (particularly technology based firms) were more likely to reach their funding goals than male led-ventures. More specifically, 65 per cent of all female-led tech startups reached their funding goals through using a crowdsourcing platform, versus just 30 per cent of male-led tech start ups. Furthermore, outside the tech industry female-led ventures prevailed. Overall, 37 per cent of all female-led ventures (using crowdfunding) were funded compared to 32 per cent of male led ventures.
This is a stark contrast to funding success rates via traditional methods. An MIT study conducted in 2013 found that investors preferred entrepreneurial pitches presented by male entrepreneurs compared with pitches by female entrepreneurs, even when the content of the pitch was the same. When analysing three years’ worth of entrepreneurial pitch competitions (where applicants pitch their venture idea to angel investors) researchers found male applicants were 60% more likely to receive funding for these. Furthermore outside of crowdfunding, female-led companies have received only 7% of all venture capital funding in the United States in the last year.
So why the disparity in funding success? Both studies believe unconscious gender bias to be the culprit. Greenberg and Mollick believe that given a choice of whom to associate with, we tend to […]
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