Gender Dynamics in Crowdfunding (Kickstarter): Evidence on Entrepreneurs, Investors, Deals and Taste Based Discrimination

Abstract

In this paper we investigate whether a new form of venture financing – crowdfunding – reduces the barriers of female entrepreneurs to raise capital. Specifically, we investigate gender dynamics and biases in the process of raising funding to new projects via the leading crowdfunding platform – Kickstarter. We find women made up about 35% of the project leaders and 44% of the investors on the platform. On average, men seek significantly higher levels of capital than women for their projects, and also raise more funds than women. However, women enjoy higher rates of success in funding their projects, even after controlling for category and goal amount. Only about 23% of projects that men invested in had female project leads. Conversely, more than 40% of projects that women invested in had female project leads. Multivariate analysis indicated significant positive correlation between the gender of the project leader and the percentage of the same gender investors. Questions arise around what factors explain the fact that female-led projects are predominantly financed by women. In an attempt to disentangle taste-based discrimination from statistical discrimination we conducted a survey of investors from the Kickstarter platform and find evidence that some of lower investment in female-led projects by men can be attributed to taste-based discrimination.