Gender Diierences in Crowdfunding - Entrepreneur Overconndence and Campaign Outcomes

Abstract

Crowdfunding is one of the most successful segments of the burgeoning fintech industry that might challenge the role of traditional financial intermediaries. We document a number of gender differences in crowdfunding by analyzing a near-comprehensive sample of Kickstarter campaigns launched by individual entrepreneurs in the U.S. We argue that these differences are most plausibly explained by male entrepreneurs' relative overconfidence. Suggesting a tendency to overestimate the potential demand for their products, we find that male entrepreneurs set higher goal amounts, which results in more frequent campaign failures. In contrast, female entrepreneurs' campaigns are more likely to succeed and achieve higher pledged amounts relative to campaign goals. In successive campaigns, both male entrepreneurs' goal amounts and success rates converge toward those of female entrepreneurs, consistent with entrepreneurial experience mitigating the effects of overconfidence. The results are robust to using matched control groups, alleviating the potential concern about a selection effect.