The gender issues of crowdfunding

I bet you didn’t know that crowdfunding also had gender issues, just like most of the rest of the tech and financial sectors. But these are of the constructive, redressing-the-balance kind. The gender composition and male domination of the main VC firms has been much in the press recently, thanks in part to the Ellen Pao/Kleiner Perkins discrimination trial. She may have lost, but she did achieve her goal of highlighting the character of the industry behind much of the innovation and growth of the new economy. For such a powerful engine to be plagued by arrogance and sexism is both startling, given its “progressiveness” and “coolness”, and alarming, given its power and influence. Enter, stage left, the disruptors: alternative finance.

But before we get onto the exciting, action-packed plot development, let’s re-hash some of the sad and disconcerting gender figures of the tech and finance sectors. Only 3% of companies that received VC funding between 2011 and 2013 were female-led. 14% of the amount invested by VCs in 2014 went to companies founded by women. Only 10% of Series A financing rounds were for companies female-led companies. Only 13% of VC-backed firms have at least one female founder, and women account for less than 8% of executives at these companies. Only just over half of big tech companies have a woman on their executive management team, vs 84% overall. We make up less than 20% of angel investors, 11% of Silicon Valley executives, and less than 6% of venture capital partners.

women funded infographic 2

On Kickstarter, the leading crowdfunding platform, women lead 34% of projects overall, yet account for 36% of successful ones. A positive difference, although not a huge one. So check this out: on Kickstarter, women lead only 10% of technology-related projects, yet account for 67% of successful outcomes! The advantage is most marked in technology-related projects, but it does also apply across the board: on the whole, women are 13% more likely to meet their fundraising goals than men. On Indiegogo, the other main crowdfunding platform in the US, the picture is similar: according to the site, women are 61% more likely to reach their funding goals. The equity crowdfunding platform CircleUp has a similar story: 35% of campaigns are run by women. Yet 78% of female-led campaigns are successful, vs 58% for male-led companies.

But is it because we’re better fund raisers?

A relatively recent study says not necessarily. What’s at play here is an implicit bias in selection from Kickstarter’s 44% of female investors. We’re not really interested in technology, in general: 23% of investors in technology projects are female, vs 66% in dance, 58% in fashion and food. Yet, when we invest in technology projects, we strongly favour female-led teams, to a much greater degree than in other sectors. The preference is across the board, and we’re not the only ones with a bias: only 23% of projects that men invested in had female leads (bias one way, remember that women lead 34% of Kickstarter projects), while 40% of investments by female investors went to women-led teams (bias the other way).

Yet the difference is especially striking in the technology sector. Our investment in female technology teams was 110% higher than our investment in their male equivalents, while the difference in the female-dominated sector of fashion, for example, was only 44%.

kickstarter

So what’s at play here? It looks like we are voting with our wallets, and trying to redress the gender imbalance in technology, one backed project at a time. Are we consciously choosing female-led projects over male-led projects? Or is it an instinctive, unconscious leaning? I suspect that there’s quite a bit of both.

The important takeaway, though, is yet another proof of the profound impact that crowdfunding and other alternative financing forms are having on not only how we do business, but our society as a whole. Crowdfunding is opening more doors for women seeking financing for their technology-related projects, and making it easier to sidestep the stereotypes of VC and angel investing. It also gives more women an opportunity to back interesting projects, to get involved, to be part of the change. Women supporting women? Nothing new there. We just have even more ways in which to do it.
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If you would like to read more about crowdfunding, check out my “crowdfunding” category, or take a look at my Flipboards:

flipboard women in tech

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