Revealed: Women Entrepreneurs’ Crowdfunding Advantage

Note to women entrepreneurs: Make society’s gender stereotypes work in your favor!

Personal experience and years of observation have taught me that women have a more difficult time winning investor backing for their startups than men. In fact, only about 1.3 percent of startup funding goes to women-owned projects.

Since the most in the venture capital world are men, I think it’s safe to say that their reluctance to fund women’s businesses is due at least in part to their negative perception of women’s ability to run a company.

As more women prove their leadership abilities, this is changing; but there is still a long way to go.

However, not every perception or stereotype about women is negative and if we can find ways to build on the positive perceptions people have about women, we should be able to move forward more quickly.

To that end, a recent study by researchers at Indiana University’s Kelley School of Business provides some valuable insights. Michael A. Johnson, Regan M. Stevenson, and Chaim R. Letwin examined gender bias in crowdfunding and discovered that on Kickstarter, women are more likely than men to get the financial support they seek. In other words, while professional venture capitalists tend to shun women entrepreneurs, amateur investors favor women entrepreneurs.

For their study, the scholars looked at 416 projects in light of the gender of the founder and the financial backing each project received. After they uncovered the edge women seem to have on the Kickstarter platform, they conducted an experiment with 73 amateur investors to find out why.

As they dug deeper, they found that amateur investors perceived women as more trustworthy. “When a crowdfunder holds high levels of implicit gender bias, the funder is actually more likely to invest in a woman because they perceive the woman as trustworthy,” Stevenson said. “This is the opposite effect of what has been demonstrated in prior research in the venture capital setting.”

Women: Make society’s gender stereotypes work in your favor!

This is important to understand because it leads to a conclusion that is, frankly, contrary to what many women in business believe. In the venture capital world, the thought has been for women to downplay their feminine characteristics to improve their odds at winning funds. However, if women take that attitude on any of the popular crowdfunding platforms, there’s a good chance they will be decreasing their ability to be funded.

If you’re planning to launch a Kickstarter or Indiegogo campaign, don’t hide the fact that you’re a woman or a team of women. Right out of the gates you have the advantage of perceived trustworthiness. Take advantage of it to get your foot in the door and then work hard to live up to the trust investors put in you.

Editor’s note: You’ll find the university’s press release on the study here.