Crowdfunding campaigns fronted by women reach their fundraising targets 20% faster than those promoted by men and couples, according to a new study.
Pomme Theunissen at Maastricht University in the Netherlands and Matteo Millone, who works at APG Asset Management, analyzed 934 bids for business loans on three Dutch crowdfunding platforms. The Netherlands is “surprisingly the third-biggest crowdfunding market in the world,” according to Theunissen.
They found that women-fronted campaigns on the platforms reached their goals 20% faster than those fronted by men—which had roughly the same speed of completion as those fronted by couples. The data was gathered from the Dutch equivalent of our Securities and Exchange Commission.
“Banks in general discriminate very much against female entrepreneurs,” says Theunissen. She points to earlier research that suggests that discrimination doesn’t carry over to crowdfunding campaigns. “When it’s the crowd that decides who gets the money, women do not face this type of discrimination,” she says.
That theory was borne out in Theunissen’s study, which highlighted the speed at which women were more likely to succeed in their targets than their male counterparts seeking crowdfunding. The reasons there was such a distinct difference were varied, says Theunissen. Women typically request smaller loan amounts, which are more likely to be fully funded compared to the larger amounts often requested by men on these platforms. But more than that, the academic believes that there are other differences that played a more significant role in determining female supremacy in the space.
The wisdom of the crowds helped women succeed because when a woman goes for a bank loan through traditional means, it’s one person’s decision that dictates whether or not their request is granted. For crowdfunding, would-be backers are able to see that others have supported the project, nudging them toward favoring the proposal and limiting some of the gender biases in perception that may exist. “The herding effect is somehow stronger for females than for males,” she says.
How women are able to present themselves also plays a factor, says Theunissen. “We have the beauty premium and the trustworthy look,” she says. “You can choose very much how you convey that soft information as well.” Female support for their own representatives also helps. As Theunissen points out, crowdfunding campaigns can draw on a broader range of funders than traditional banks, which often perpetuate age-old gender stereotypes.
Because the Netherlands is such an unusually strong country for crowdfunding, Theunissen believes that the results—gathered over three platforms within the country—are representative of the wider crowdfunding space. And she suggests that the results are a balm for those seeking to raise money for their ideas. “Crowdfunding and fintech in general is growing, and this offers opportunities for entrepreneurs,” she says.