The article “Is There a Gender Gap in Kickstarter Campaigns?” first appeared on Alpha Architect Blog.
Gender Dynamics in Crowdfunding (Kickstarter): Evidence on Entrepreneurs, Backers, and Taste-Based Discrimination
- Hadar Gafni, Dan Marom, Alicia Robb, and Orly Sade
- Review of Finance
- A version of this paper can be found here
- Want to read our summaries of academic finance papers? Check out our Academic Research Insight category
What are the Research Questions?
Does the gender gap extend to the crowdfunding arena? We have reason to believe that it does not or at least is not as severe as observed in other capital raising arenas. The relative anonymity of these platforms may indicate women may be more involved in raising capital via crowdfunding. The authors argue a persuasive case.
The Internet enables practically barrier-free entry to these platforms, thus there are fewer gatekeepers who may be biased against women and, hence, restrict access to a wider variety of entrepreneurs. In addition, the Internet allows people to be involved in a much more anonymous fashion. There is often little or no in-person or face-to-face interaction between project leaders and funders; thus, women might feel more comfortable launching a project or idea in this space, even in industries that are typically male-dominated. The introduction of such platforms may well attract greater female participation.
The authors test 4 hypotheses:
- The level of participation of female entrepreneurs on the platform is different from the level of participation of male entrepreneurs.
- Female entrepreneurs participate in different project categories at a different rate than male entrepreneurs.
- Female entrepreneurs set lower funding goals than male entrepreneurs.
- Female entrepreneurs will, ceteris paribus, achieve lower success rates than male entrepreneurs.
What are the Academic Insights?
- YES. Hypotheses 1 and 2 focus on the level of participation of women vs. men in crowdfunding. Specifically, women were 34.7% of project leaders and 36.4% of the subset of funded projects. Also, women were identified with specific categories in which they tend to participate. Female entrepreneurs were clustered in some categories of projects and not others. For example, see the category Comics, Design, Games, and Technology (Panel A in Table I), where male entrepreneurs represent 76% to 92%. A similar result occurs when comparing the Dance, Fashion, and Food, where women entrepreneurs represented 77%. Definitely a stereotypical result that mimics the patterns observed across industry sectors for US firms. In order to perform a more rigorous demonstration, the authors examined an industry that exhibited similar gender differences in the general economy and compared it to the same category on a crowdfunding platform. It turns out that the Film and Video category fit the bill. The results confirmed the basic hypothesis regarding participation by women. The Film and Video category on Kickstarter, for example, exhibited 29.9% women as compared to 17.3% for the sector in the general economy for the director role.
- YES and NO for Hypothesis 3. There are noticeable differences in the average funding goals between men and women. Referring to Table I, Panel A, women report an average of $3,200 in Dance and almost $19,000 in Technology categories. On the other hand, men report a low of $3,000 in Dance to $66,000 in Games. The numbers are significant in an economic sense, but the difference in the overall averages ($6,468 for female-led projects and $9,468 for men) was not statistically significant.
- NO on Hypothesis 4. The women in the Kickstarter sample produced a success rate of 82% compared to 76% for men. Referring to Panel A, Table I again, the female-led projects exhibited a larger representation in terms of success in all categories with the exception of Games and Technology.
Why Does it Matter?
This paper not only introduces us to different approaches and business categories in which Males and Females seek capital, but also the success rate of each, based on gender. Counter to results in other studies this research found that women are succeeding as well as men in raising capital in the crowdfunding arena.
Disclosure: Alpha Architect
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Alpha Architect, its affiliates or its employees. Our full disclosures are available here. Definitions of common statistics used in our analysis are available here (towards the bottom).
This site provides NO information on our value ETFs or our momentum ETFs. Please refer to this site.
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Alpha Architect and is being posted with its permission. The views expressed in this material are solely those of the author and/or Alpha Architect and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.