Female entrepreneurs have often had trouble finding investors through traditional avenues, but they have the upper hand when using crowdfunding because they’re perceived as more trustworthy, according to a new LSU study.
LSU Assistant Professor of Management Michael Johnson and a team of researchers analyzed three years of data from Kickstarter, examining the entrepreneurs’ gender, financial backing received and funding success in a sample of 416 projects. Women were more likely than men to have their campaigns funded.
“Historically, funding from banks, private equity and venture capital is more likely to go to men because of the perception that business leaders should be masculine,” says Johnson in a statement. “In contrast, crowdfunding investors see female entrepreneurs as more trustworthy; this perception leads to higher overall investment in female-led ventures over male-led ventures. In this instance, gender bias works in their favor.”
The findings are significant because previous research has found that female-led firms receive just 1.3% of venture capital financing. Also, when they accept private funding, they’re often asked to surrender a higher proportion of ownership.
Titled “A woman’s place is in the … startup!,” the study was recently published in the Journal of Business Venturing.