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Women more successful at crowdfunding than men, says study

/ 07:01 PM July 30, 2017
business, entrepreneurs, businesswomen, women

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While men continue to dominate the business sector, women are able to start their business from the ground through crowdfunding and are more successful at this method than their male counterparts.

In 2015 and 2016,The Crowdfunding Center and PricewaterhouseCoopers (PwC) conducted an analysis of 450,000 seed crowdfunding campaigns in 205 countries. Examples of seed crowdfunding include sites like Indiegogo and Kickstarter where people can pitch their entrepreneurial plans and raise the necessary capital for it.

Men far outnumbered women in conducting campaigns with 139,000 versus 55,000 campaigns for men and women, respectively.

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However, women had a higher success rate at reaching their targets. They outperformed men at 22 percent, versus men’s 17 percent success rate.

This held up regardless of sector, territory and culture. In Asia, women had a 14 percent success rate while men had 7 percent. In the United States, it was 24 percent for women while men had 20 percent.

In terms of sectors, women also outdid their male counterparts. For education projects, 12 percent of women and six percent of men successfully raised pledges. Even in technology, 13 percent of women and ten percent of men crowdfunded successfully.

A number of factors contributed to this. First, and most importantly, is that crowdfunding has more diversity in genders which leveled the playing field for women. While there are more male backers in crowdfunding, they had “greater openness to gender equality” and were “more likely to invest in female-led projects.”

Another is the way women presented their projects. Female crowdfunders have “more emotional and inclusive language” which was “more appealing both to female and male backers.”

Interestingly, using business language made funding less likely for a pitch.

The study also points out that women turn to crowdfunding because majority of traditional funding, such as venture capitalists (VCs), do not benefit women. Most VCs are men and are more likely to provide capital to male-led businesses, even if the pitch content is the same for both sexes.

Only seven percent of partners of the top 100 venture firms in the world are women. VCs perceive that women running businesses are riskier or won’t meet a return on investment.

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Because of discrimination and lack of female representation, the study cites a “missed opportunity” worth $300 billion for women in business.

Both women and men can learn from one another: while men can adapt women’s techniques in terms of presentation, women should also strive for higher targets and continue to use crowdfunding to jumpstart their business. Only 7 percent of campaigns that raised more than $1 million were female-led, which means there is still more that women can achieve and that women should be confident in their capabilities to run a business.

The study also calls on institutions such as governments, banks and business organizations to make financing businesses more gender-equal. Recommendations include training women entrepreneurs how to pitch and market their ideas to traditional firms, allotting more funds for female-led start-ups, and promoting crowdfunding for both investing in and creating businesses. JB

RELATED STORY:

Male venture capitalists more gender-equal when they have more daughters — study

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TAGS: business start-ups, crowdfunding, Entrepreneurs
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