Crowdfunding and the Gender Gap: Democratizing Entrepreneurship

The gender gap is alive and well in nearly every realm of the business world, with fewer women in leadership positions than men, inequities in venture capital funding for and investment, and persistent and pesky stereotypes that persist within the industry. According to Access to Capital by High-Growth Women-Owned Businesses, research commissioned by the National Women’s Business Council (NWBC), female entrepreneurs start companies with 50% less capital than male entrepreneurs.

Why is this a problem? Besides the fact that gender equality should be a given in a modern democracy, women start business at twice the rate of men. Because of these astonishing numbers, organizations such as the World Economic Forum identified women entrepreneurs as “the way forward” at their annual meeting, while Saskia Vossenberg, of The Maastricht School of Management describes women entrepreneurs as the New Women’s Movement, asserting, “Forget aid, focus on foreign investment in women entrepreneurs as key drivers for growth and development.”

Amid this dreary outlook for women, crowdfunding is a bright spot. Fundraising through online platforms skyrocketed to $16.2 billion in 2015, a whopping 167% increase from the previous year, according to Massolution’s 2015 Crowdfunding Industry Report. Female entrepreneurs are almost ten times more successful in raising capital with online platforms than with conventional banks, according to CircleUp. Not only do women make up 44% of businesspersons on Kickstarter, but the Wall Street Journal found that 37% of female-led projects on Kickstarter were successful in reaching their funding goal compared to just 32% for male-led projects.

The reasons for female success on these platforms are not clear, though academics have theories as to how the gender gap is closing online. According to Andrea Gorbatai, an assistant professor at UC Berkeley’s Haas School of Management, “women are better at telling a story that resonates with potential crowdfunding investors.” In part, this has to do with the unique writing styles and social constructed roles between the genders. Women are more often willing and able to express themselves emotionally and write about their personal lives, including relationships; this approach is generally more successful in persuading readers to donate to a project than what men write. Gorbatai, along with her co-author Laura Nelson from Northwestern’s Kellogg School of Management, found that female-created pitches were less likely to use dry, impersonal business language and more likely to convey positive feelings, inclusiveness, and liveliness.

Jason Greenberg of New York University and Ethan Mollick of the University of Pennsylvania’s Wharton School have a different explanation for female success with crowdfunding. They believe the key is unconscious gender bias: men are more likely to associate with men, and women with women. While this dynamic is problematic in the conventional financial arena of banks, venture capitalists and angel investors, most of whom are male, online crowdfunding platforms are open to any and all people, vastly increasing the number of women who can help fund fellow females.

However, the news is not all positive. Only 22.5 percent of male investors’ funds went toward women-run projects, which seems to reinforce Greenberg and Mollick’s claim of gender bias. Moreover, while women did have more success than men in meeting their fundraising goals, this could be because females set their goals thousands of dollars lower than men. Female-led projects had a mean of $6,890.50 while men-led goals had a mean of $12,175.90.

Crowdfunding has become an intriguing way to potentially democratize the field of entrepreneurship. However, it is not a silver bullet for fixing the deeply engrained and institutionalized gender biases that exist in the business world.


Margaret McAlister is completing her doctorate in business degree this May, a management and health professor, and a researcher. She is also currently enrolled in the Masters of Entrepreneurship Degree Program at Western Carolina University. Webmasters and other article publishers are hereby granted article reproduction permission as long as this article in its entirety, author’s information, and any links remain intact.  Copyright 2017 by Margaret McAlister.




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