A report titled Women Unbound by PwC, produced in collaboration with The Crowdfunding Center, has identified a powerful gender dynamic: seed crowdfunding campaigns led by women consistently outperform those led by men.
Since 2014, The Crowdfunding Center has analysed data from more than 465,000 crowdfunding campaigns and this report analyses the results of two full years of seed crowdfunding campaign data (2015-16) across 205 countries and from nine of the largest crowdfunding platforms.
The report found that while men use seed crowdfunding (the use of ‘rewards based’ crowdfunding platforms to fund the creation, launch or development of new businesses, products and services where backers pay upfront for a product, service or project) more than women, women are more successful at crowdfunding then men. Seventeen per cent of male-led campaigns reach their finance target, compared with 22% of female-led campaigns. Overall campaigns led by women were 32% more successful at reaching their funding target than those led by men across a wide range of sectors, geography and cultures.
Even in what are considered more masculine sectors, for example, technology, where we see nine male seed crowdfunders for technology ventures to every one female crowdfunder, 13% of women were successful in achieving their funding goal compared to just 10% of men. In territories with the largest volumes of seed crowdfunding, the UK and the US, 20% of male-led campaigns reached their targets. Yet, female-led campaigns outperformed, with 24% of women in the US and 26% of women in the UK successfully reaching their campaign funding target.
The report highlights that trend continues in territories where seed crowdfunding is not yet as wide-scale or as successful. For example, 11% of female-led campaigns in Africa were successful compared with 3% of male, and 10% of female-led campaigns compared to 4% of male-led in E7 countries (China, India, Brazil, Mexico, Russia, Indonesia and Turkey).
Female crowdfunding success is in stark contrast to established funding mechanisms for business startups and growth in which women-led businesses continue to face barriers to accessing finance.
Most decision-makers in the venture capital industry are male; the report highlights that in fact, just seven per cent of partners of the top 100 venture firms globally are women; and of 2,300 venture and micro-venture firms, only eight per cent of partners are female. This leads to biases in funding decisions with research indicating investors prefer pitches from attractive male entrepreneurs even when the content is similar to that of women’s pitches.
Financial exclusion remains a major constraint for women, particularly in developing countries. Worldwide, a $300 billion gap in financing exists for formal, women-owned small businesses, and more than 70% of women-owned small and medium enterprises have inadequate or no access to financial services.
The authors of the report highlight that this funding gap is a missed opportunity: investing in or supporting women-led businesses has the potential to deliver some of the highest returns – for investors and societies.
However, it also underlines that while women are outperforming men in achieving their funding targets across the board, the fact remains that significantly more men are crowdfunding than women. As a result, men raise substantially more finance via this channel. Men are also more ambitious in establishing higher funding goals than their female counterparts, and they dominate in the most top-funded campaigns by sector.
Despite this, significant opportunity remains for women to become more active and represented in crowdfunding and to be more ambitious when establishing their finance raising goals.