Crowdfunders more likely to back female-led start ups

equity v crowdfunding

According to a new study 100% of female founded businesses, and 90% of male and female co-founded businesses, reached or exceeded their Crowdfund targets on the platform last year.

In contrast, just 80.9% of male founded companies reached their targets.

Joelson, the London-based law firm, recently conducted the study, analysing data provided by Seedrs, a leading crowdfunding platform investing in start-ups throughout Europe. The study looked into how successful female-led businesses were in comparison with their male counterparts, when it came to securing funding.

Crowdfunding has become increasingly popular as a way for start-ups to raise funds online, with individuals and businesses, generally considered to be “amateur investors”, able to invest small amounts.

However, the study also illuminated that 8% of the funded businesses on the Seedrs platform in 2018 had a female entrepreneur at the helm, a percentage that Seedrs has actively aimed to increase in 2019. This may suggest that women are more cautious to use crowdfunding, and only do so when they are sure in the marketability and success of their product, as opposed to men, who are willing to take a chance on their product, and will pitch to investors regardless.

Numerous explanations have been suggested for why crowdfunding is providing women with opportunities that traditional investment avenues have fallen short of doing. One argument suggests that crowdfunding attracts a diverse community of amateur investors, including many more women than are traditionally seen on a board of a venture capital firm or angel investor.

Another popular theory is that unconscious gender bias creates stereotypes of how women are perceived to amateur investors, including the notion that women are more trustworthy, and therefore a safer investment.

Whatever the reason, it is irrefutable that crowdfunding is helping the market deal with the failures caused by gender bias seen in traditional investment routes to the market.

Philippa Sturt, Managing Partner at Joelson, says: “If you are a female founder, crowdfunding platforms could represent a growing and exciting way forward for your company’s growth. The global crowdfunding market was valued at $10.2 billion in 2019 and is expected to reach $28.8 billion by 2025.

Crowdfunding is undeniably popular and advantageous to female-led businesses, and here at Joelson, we are keen to help women push past gender bias during their fundraising process and will use our knowledge and expertise of crowdfunding for our many start-up clients, to help female-led businesses on the path to achieving their investment goals.”