It is common knowledge that there is a gender gap in access to finance, entrepreneurship, and investment. Yet, many also argue that crowdfunding campaigns rather than sustaining this gap, actually mitigate it, slowly but surely closing it. Let’s take a closer look at this now, shall we?
Women entrepreneurs still face tremendous and persistent external obstacles in their ability to raise money and the different opportunities they can access. Women founders, for instance, seek and receive less capital than their men counterparts, which can be partially explained by the lack of representation and participation of women and other marginalised people in decision-making roles in the finance world. Whilst this is true, crowdfunding campaigns represent an area of entrepreneurial finance where women fundraisers participate more and enjoy higher chances of success. Crowdfunding represents new hopeful financing doors for women entrepreneurs, thus levelling the playing field. Actually, it is a powerful tool for the democratisation of entrepreneurial financing since it allows historically marginalised and underrepresented groups to have access to the traditional capital markets.
Studies on pro-social crowdfunding platforms, such as Kiva, a platform benefitting low-income entrepreneurs, highlight that women-led campaigns are far more successful than men’s. This can be explained by the fact that investors on such platforms are looking to make an impact, a social contribution to a given cause. Since women entrepreneurs are facing more structural barriers to funding, they are seen as having a more legitimate need for financial resources, especially when they highlight their proactive desire to instigate change. The study also found that both women and men are more likely to secure funding if they counteract stereotypical gender expectations.
But crowdfunding is more than just a useful tool for entrepreneurs without capital, it can also be a driver of change, especially for individuals in precarious situations. In times of crisis, whether during an epidemic, after a natural disaster or else, people are now more and more turning towards online fundraisers to quickly find some financial relief. In other cases, private crowdfunding campaigns are used to pay for medical bills, healthcare, and gender affirming surgeries, such as breast augmentation or mastectomy. This is an important avenue for many trans and non-binary individuals who may not have the resources to cover such surgery. However, research also shows that these campaigns come with racist or sexist biases where already marginalised groups have a harder time to meet their fundraising goal. In this way, crowdfunding campaigns may have the power to individualise the fulfilment of basic needs, thus creating deserving and less-deserving individuals based upon investors’ personal assumptions. Private philanthropy can and should continue to be used for those in need. However, it should never replace what is the duty of a welfare state. Private crowdfunders deserve more than being kept at bay by the fluctuating generosity of private benefactors.
Now, if we turn to the behaviour of investors, there are also some gender dynamics at play. First of all, perhaps surprisingly, women investors do not necessarily prefer to fund women entrepreneurs. However, the surprising aspect is that women investors are more likely to fund projects in which the proportion of men investors is higher. Here, one can easily witness a form of cultural and gendered bias where women’s competences are downgraded by other women who simply duplicate men’s decisions and sustain underlying patriarchal assumptions on women’s ability to lead projects or secure funds. Yes, stereotypes may still persist even with more women-led campaigns. Yet, crowdfunding platforms do still allow for a better participation of women investors and could be a way to undermine these cultural biases.
All in all, crowdfunding may be said to increase the participation and representation of women both on the investing and the financing side, which allows a more inclusive financing system.