Study: Online crowdfunders trust woman-led ventures more

The sad reality of being a woman leader in a startup business is that you have fewer female role models. Fewer than 10% of technology startups backed by venture capital are owned by women. Overall, only 2% of overall venture capital financing went to women-led startups in 2017. But a new study from Indiana University’s Kelley School of Business has found one upside to being a woman seeking money for her startup — women may be less likely to get venture capitalists to give them money, but people supporting crowdfunding projects on the internet are actually more likely to invest in a woman than a man.

Looking at three years of Kickstarter data, the university found that women were more likely than men to have their startup ideas funded. Why? Because they were trusted more.

“Our findings suggest common gender biases held by amateur investors function to increase female stereotype perceptions in the form of trustworthiness judgments, which subsequently increases investors’ willingness to invest in early-stage women-led ventures,” the study found.

Study: Women are seen as more trustworthy on Kickstarter

On crowdfunding platforms like Kickstarter, you have a digital crowd of amateur investors making small bets on projects to fund. These amateur investors do not have formal pitch meetings and stats to based their decision on. They may need to lean on their gut about which individuals to invest their time and money into. This is where an implicit gendered bias on which kind of person is more trustworthy actually comes in a woman’s favor.

When the researchers showed 43 crowdfunders fake pitches and videos for startup ideas, trustworthiness was a key factor in whether or not they funded an idea. The more trustworthy the entrepreneur was perceived to be, the more likely they were to get funding. And predominantly, crowdfunders found women to be more trustworthy than men.

Sometimes, women are told to downplay their gender in their jobs, aware that men may see them as less competent. But when you are a woman seeking money through Kickstarter, just being yourself may be the best advice you can follow, the researchers suggest.

“Previous research in venture capital setting has advocated that women should downplay feminine characteristics to increase their chances of obtaining funding,” Regan Stevenson, one of the study’s authors, said. “This advice not only appears to be dogmatic, but our data shows it is simply bad advice for female entrepreneurs when they are obtaining funding through crowdfunding platforms.”