Gender-specific Local Bias in Equity Crowdfunding

Abstract

We investigate gender-specific local biases among investors in the German equity crowdfunding market. Based on data from the crowdfunding platform Companisto, we find that domestic investors favour ventures that are geographically closer to their own place of residence and that they are biased more strongly against ventures with females on the top management team. Moreover, female investors exhibit a stronger local bias than male investors do, but there is also evidence of gender-related homophily, to the effect that female investors favour ventures with female top management team members. Thus, our results suggest that from a female entrepreneur’s perspective, choosing the right location for a venture’s headquarter – that is, a location in close proximity to a large body of potential female crowd investors – may be of particular importance to maximize funding success.

Keywords: equity crowdfunding, local bias, venture financing, geographical distance, female entrepreneur, gender effects

JEL Classification: D91, G11, G41, J16, O16