Women Beat the Men in Crowdfunding Success.
What does it take to launch a successful campaign in crowdfunding? Maybe it needs a woman’s touch. Statistics and studies by business schools point out some dynamic, game-changing trends in crowdfunding that are challenging the traditional views of women and their roles in the business world. Crowdfunding has dramatically altered the commercial landscape for entrepreneurial innovation and the numbers support this: according to an industry analysis conduction by Massolution, a research firm that specializes in crowdfunding, the new kid in town raised more than $34 billion in 2015. Angel investors and venture capitalists like those numbers. They also like the way that campaigns led by women entrepreneurs bring results. Check out these statistics: Teams lead entirely by women were 40% more likely to meet their goals. For women-led tech projects on Kickstarter, the success rate was 65% compared to 35% for teams led by men. Clearly, when it comes to crowdfunding, girls rule!
Why Women are More Successful in Crowdfunding.
So what’s the reason for these amazing numbers that bring women entrepreneurs to the finish line more often than their male crowdfunding counterparts? What about that study by MIT that discovered that women were less likely to shine when making a pitch for funding to investors than men, even if the pitch was exactly the same? Here’s the difference. When potential donors to an online platform are responding to the campaign itself, rather than the visual images and body language of the fundraiser, they’re more focused on the campaign. That’s where the actual language of the campaign comes into play, and that’s where women go to the head of the class, according to the research done by Andreea Gorbatai of the University of California Berkeley’s Haas School of Business and Laura Nelson from the Kellogg School of Management at Northwestern University. According to their research, “Women are better at telling a story that resonates with potential crowdfunding investors.” In order to deliver a successful crowdfunding campaign, the story must draw an emotional reaction from the audience. This is no children’s bedtime story; this is a striking and novel discovery about how the power of a message can be enhanced when the story itself is the focal point. For mothers, and for female people of color, the online platform provides the opportunity for their story, and not social stereotypes, to convey the message to an audience that isn’t distracted by unconscious bias.
The Innovation and Language of Crowdfunding Success.
While men are more likely to base their campaign on language that’s related to the subject of money, women call on inclusive, positive emotional language to deliver their message. It’s a strategy that works; the study found that women are more likely to raise the funding they need than are men. In fact, the study discovered that the use of business language actually correlated negatively with the amount of money raised. Nor was it vivid language that tipped the scales for success; it was the ability of the campaign language to draw on people’s emotions.
That’s right. Emotion. Remember when a common criticism of women striving to achieve in the male-dominated worlds of finance and politics was that they were too emotional? It turns out that emotion is exactly what’s needed to entice contributors who need to believe in the power of the story that’s conveyed. Emotion is the vehicle by which contributors see themselves as a willing passenger in the project and as the studies demonstrate, women drivers know how to reach their destination. (They might also be more willing than men to ask for directions when they need them, but that wasn’t a topic covered by the study!)
Female Success in Indiegogo Crowdfunding Campaigns.
The data for the study was taken from almost 10,000 small business and tech-based Indiegogo campaigns running from 2010-2013, where women were the single entrepreneurs on approximately 10% of the tech campaigns and approximately 35% of the small business projects. The study focused on Indiegogo campaigns because the crowdfunding giant’s flexible terms allow the fundraisers to receive the money whether or not they’ve met their goal.
The results are fascinating and maybe even surprising to people who are used to a traditional financial model. Inclusive and emotional language resulted in more successful campaigns. When potential donors are paying attention to language and not relying on unconscious bias or stereotypes, they listen to the story. Another factor leading to female success in crowdfunding is the fact, borne out by a study from New York University and Wharton School, showing that women tend to be more supportive of one another in crowdfunding.
The study acknowledged that a campaign that offers a superior product or a stand-out business idea is likely to succeed by virtue of its content. They also concede that crowdfunding, because it’s not a traditional way of raising capital, means that contributors don’t regard their investment the same way that a bank’s loan officer or a professional angel investor will. But there’s a different spirit in crowdfunding that clearly resonates with a vigorous new approach to investment, which is based on the products and ideas that inspire rather than the standard risk and portfolio management. The next time you’re surfing crowdfunding websites, take a look at the different campaigns and see how the battle of the sexes plays out.
What does this mean for the future of business? As crowdfunding continues to flex its muscle in the entrepreneurial world, women are finding that they can compete with and even surpass the traditional male-dominated advantage with their own strength. Watch out for women entrepreneurs: that noise you’re about to hear is the sound of the glass ceiling as it shatters.