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 associate with the familiar; men are more likely to associate with men and women are more likely to associate with women. There is a significant underrepresentation of women within traditional financial gatekeeping roles (such as venture capitalists and angel investors) which suggests female entrepreneurs will be less likely to receive funding, as predominantly male gatekeepers will align closer with male applicants. On crowdfunding platforms however, these traditional gatekeepers are not present. Crowdfunding is open to anyone and they can choose to help fund any idea they support. Consequently there are a lot more women present, who can easily access other female funders, due to the reduction in search costs and social constraints.

Furthermore the MIT study cited that crowdfunding platforms could act as a buffer against unconscious gender bias. During a live pitch session there is much more emphasis on the delivery of the pitch and findings concluded this is more likely to ignite gender stereotypes. The study suggested that when we imagine an entrepreneur, typically we picture a male- when you see a female pitching an entrepreneurial venture, this then goes against the preconceived image you have in your head. However, when examining proposals or pitches via crowdfunding, because you are not dealing with investors face to face it becomes easier to focus on the risk benefit calculation of the deal rather than on gender dynamics.

Regardless of the reasons for the success of female applicants, the latest statistics on crowdfunding is an encouraging sign. The promise of female entrepreneurs overcoming gender based barriers means they can now access the funds to start new ventures. This has the potential to not only increase the number of female entrepreneurs but to also boost the number of women holding leadership positions within the workforce- a statistic many countries have been focusing on improving over the last few years.

One particular organisation which has used crowdfunding as a mechanism to not only increase the number of women in leadership roles but to improve women equality overall is the company ‘Catapult’.Catapult is an online platform that takes on organisations and individuals needing funding for projects specifically promoting women’s rights and gender equality across the globe. Any individual is then able to donate to any particular project they choose. Currently 432 Catapult projects have been fully funded, including economic empowerment programs, education incentives and not-for-profit maternity clinics.

Ryan Caldbeck, CEO of the crowdfunding platform CircleUp, believes platforms like ‘Catapult’ are just the beginning. “The next decade will be great for female-led entrepreneurs and organisations. Traditional gatekeepers no longer hold the key for financing start-ups and we should see a diverse group of start up companies and business projects contributing to our economy”.

To see the full findings from Greenberg and Mollick’s study click here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2462254

To find out more about ‘Catapult’ and the current projects being funded, click here: http://catapult.org/find-project