Women trying to get venture-capital funding face long odds: Somewhere between one and six percent of VC-supported companies were founded by women. Some might explain this by pointing out that women are less likely than men to seek venture-capital funding, which is partially valid. But even then, venture capitalists have been shown to be biased against would-be female entrepreneurs; a study from earlier this year found that professional investors rated pitches from men more highly than those from women, even though the content of those pitches was the same.
A study published last month, authored by New York University’s Jason Greenberg and the University of Pennsylvania’s Ethan Mollick, recommends an alternative for women seeking venture-capital money: Kickstarter. The research found that projects on the site started by women are more likely to succeed than those started by men. Even though Kickstarter operates on a much smaller scale than the VC industry as a whole, the fact that more than 90 percent of its funded projects go on as businesses for one to four years points to the usefulness of the site in promoting more equality in entrepreneurship.
Greenberg and Mollick analyzed 1,250 Kickstarter projects, dividing them into categories of those whose founders and backers tended to be male (technology, gaming), tended to be female (fashion, children’s books), and were about even (film). They didn’t examine any projects with goals under $5,000, endeavors they suspected were liable to have received biased backing from family and friends.
Across the board, projects started by women were more likely to fulfill their funding goals than those started by men. Interestingly, female-headed projects had the starkest advantage in the category of technology, an industry often thought of as hostile to women.
Kickstarter Success Rates for Men and Women, by Product Category
It struck the researchers that women's success on Kickstarter wasn't concentrated in female-heavy categories. This led them to believe that Kickstarter's relative fairness might be derived from its ability to match female entrepreneurs with a small but dedicated audience of female funders interested in supporting women in female-unfriendly industries.
To test this hypothesis, they showed subjects Kickstarter projects that had already been successfully funded, keeping all aspects of the projects constant except for the name, gender, and picture of the entrepreneur. When the researchers constructed the identities of these founders, they took care to find ethnically similar people of average attractiveness—this being academia, they consulted another study to determine what that would look like—and had them throw on a neutral gray T-shirt for their profile pictures.
The results of this experiment confirmed that women who indicated an interest in promoting women in male-heavy industries were more likely to support female-headed projects. That’s why the female-backed campaigns that were likeliest to succeed weren't, say, children's books, but rather smartwatches.
The empowerment of female entrepreneurs plays into a larger conversation about how to achieve corporate gender equality. More and more business leaders are supporting quotas for women in decision-making roles, but, as Greenberg and Mollick's study suggests, numerical representation only goes so far. It seems a key ingredient in promoting gender equality might be an opinionated group of influential women who will go out of their way to help other women make their way through unwelcoming industries.