Gender Gaps in Equity Crowdfunding: Evidence from a Randomized Field Experiment

60 Pages Posted: 1 Nov 2018 Last revised: 21 Jul 2019

See all articles by Sofia Bapna

Sofia Bapna

University of MN, Carlson Schoiol of Management

Martin Ganco

University of Wisconsin - Madison - Department of Management and Human Resources

Date Written: July 17, 2019

Abstract

While prior research shows a significant gender gap in traditional equity financing, with mostly male investors who prefer male founders, emerging evidence indicates that gender gaps in funding may not translate to rewards-based crowdfunding, where female entrepreneurs may have an advantage, particularly with female investors. We seek to examine founder gender preferences in the context of equity crowdfunding, which represents a direct counterpart to traditional equity financing and which is a “higher-stakes” context than rewards-based crowdfunding. More specifically, we explore whether founder gender preferences, if they exist, vary based on the gender and the experience of the investor. Through a randomized field experiment, we find that inexperienced female investors are significantly more interested (138%) in ventures with female founders than those with male founders; however, we do not observe founder gender preferences among experienced female investors. For male investors, we do not observe differences in interest in investing based on founder gender or investor experience. We thus confirm that the gender gaps observed in traditional equity funding do not apply to equity crowdfunding. Further, we theorize that the mechanisms proposed in previous research in low-stakes crowdfunding decision contexts, such as the use of founder gender as a heuristic and participation in activism homophily, that drive female investors to prefer female founders may not apply to experienced investors in higher-stakes equity crowdfunding. The results from a follow-up survey of the study participants provide support for our theoretical arguments.

Keywords: new ventures; gender gaps; entrepreneurial finance; crowdfunding; randomized field experiment

Suggested Citation

Bapna, Sofia and Ganco, Martin, Gender Gaps in Equity Crowdfunding: Evidence from a Randomized Field Experiment (July 17, 2019). Available at SSRN: https://ssrn.com/abstract=3263533 or http://dx.doi.org/10.2139/ssrn.3263533

Sofia Bapna (Contact Author)

University of MN, Carlson Schoiol of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Martin Ganco

University of Wisconsin - Madison - Department of Management and Human Resources ( email )

Madison, WI
United States

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