BLOOMINGTON, Ind. — Traditionally, it has been difficult for female entrepreneurs to secure funding for their ventures due to a gender bias that more masculine traits typically succeed in the business world. Well, when it comes to the world of crowdfunding, new research is indicating that the script has been flipped.
A study by researchers at Indiana University’s Kelley School of Business finds that female entrepreneurs are deemed more trustworthy than men when seeking initial funding to start a new business on crowdfunding platforms.
“Our results show that on average, crowdfunders think female entrepreneurs are more trustworthy than male entrepreneurs,” sys lead author Regan Stevenson, assistant professor of management and entrepreneurship, in a statement. “These judgments increase overall investment in female-led ventures over male-led ventures. 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. This is the opposite effect of what has been demonstrated in prior research in the venture capital setting.”
Stevenson and his team examined three years worth of data on investor stereotypes and implicit bias collected from the crowdfunding platform Kickstarter. In 416 projects, the research team examined each entrepreneur’s gender, financial backing received, and funding success.
They concluded that female entrepreneurs were more likely than their male counterparts to secure funding for their Kickstarter projects.
The researchers conducted a separate experiment on 73 amateur investors in the eastern U.S. to determine the reasons behind their findings. They found that perceptions of trustworthiness influence financial backing and implicit gender bias swayed potential funders’ willingness to help female entrepreneurs.
Stevenson and his colleagues believe their findings mean that crowdfunding platforms represent a legitimate avenue for women to overcome traditional gender bias and secure funding for up and coming business ideas.
“These findings demonstrate an alternative pathway for women entrepreneurs that may allow them to overcome the negative aspects of gender bias and increase their odds of finding success,” the authors say. “Because funding is a critical component for early-stage survival, our results should be seen as encouraging.”
The study is published in the Journal of Business Venturing.