Study: Women face fewer barriers raising cash through crowdfunding

August 18, 2014 18:58

Is crowdfunding the next great emancipator for women in business?

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Some hard-line experts recommend banishing computers, cellphones, TVs and video games from a teen’s room.. (photo credit: SACRAMENTO BEE/MCT)

Is ‘crowdfunding’ the next great emancipator for women in business? A new study from the Hebrew University of Jerusalem shows that women who wished to raise capital fared better than men in crowdfunding – online platforms for raising small amounts of capital from multiple people.

Women, who according to international studies make up about a third of entrepreneurs in developing countries and about 40 percent in the US, often face funding barriers for their ventures.

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“Access to finance is repeatedly identified as a major constraint to women entrepreneurs,” the International Finance Corporation wrote in a 2011 report.

A 2012 study by online loan matchmaker Biz2Credit found that women were 15-20% less likely to get approved for small business loans.

The Hebrew University study by Dan Marom, Orly Sade, and UC Berkeley’s Alicia Robb, examined data from crowdfunding website Kickstarter, detailing $120 million of investments from April 2009 through March 2012, which included 13,533 entrepreneurs and 898,491 investors.

The study found that women hit their funding target 69.5% of the time, while men hit theirs only 61.4% of the time. Though men tended to seek higher amounts, the study found that “it was not the women’s more modest financial goals that accounted for their higher rate of success.”

One possible reason that women did better was an affinity for people to invest in projects by people of the same gender.

Women made up about 35% of the project leaders and 44% of the investors, and the researchers did indeed find a positive correlation between the gender of the project leader and investor.

Males invested in projects with female leads 23% of the time, even though female leads accounted for more than a third of the projects.

“These findings indicate that the increasing prevalence of crowdfunding platforms may lead to increased participation of women as investors and to an increase in the flow of capital to projects led by women,” said Sade

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