One of the reasons investment crowdfunding is such an important addition to the financial ecosystem is that it offers the potential to bring capital to projects and businesses poorly served by traditional ways of raising money.
That’s the theory at least, so it’s exciting to start seeing actual data to back it up. PwC has just released a report called Women unbound: Unleashing female entrepreneurial potential, and it’s full of data points suggesting that women have not only embraced crowdfunding as a tool for fueling entrepreneurship, but that so far at least they’re simply better at it than their male counterparts:
This analysis of over 450,000 seed crowdfunding campaigns across the globe shows that women-led campaigns reached their funding target more often than male-led campaigns: in fact, campaigns led by women across the world in 2015 and 2016 were 32% more successful than those led by men across a wide range of sectors, geography and cultures. Furthermore, many female-led projects achieve a greater average pledge amount than male-led projects: on average each individual backer contributes $87 to women and $83 to men.
While the report does spend some time digging into the reasons why women might be doing better with crowdfunding campaigns, the big takeaway for me is just how obvious it becomes that traditional angel and venture financing paths work against women entrepreneurs, leaving a massive “financing gap” that represents tremendous opportunity to fuel the kind of entrepreneurship that has always been the beating heart of our economy:
Worldwide, a $300 billion gap in financing exists for formal, women-owned small businesses, and more than 70% of women-owned small and medium enterprises have inadequate or no access to financial services.
To be clear, the report focuses on what PwC refers to as “seed crowdfunding” (we’ve referred to it before as “rewards-based crowdfunding”), where backers don’t receive any equity or debt investment in the business, but instead are typically pre-funding product or service development. But when looking through the data and the report’s analysis, it’s hard not to imagine we’ll see similar outcomes over time when it comes to the newer equity crowdfunding variants, especially Reg CF and Reg A+ (Reg CF portal Republic recently posted their own analysis showing 79% of the funding on their platform goes to women founders), which open up the supply side of the funding ecosystem to a much wider group of investors (ie, everyone), so is more like the audience for rewards-based crowdfunding campaigns.
While of course many who invest (in crowdfunding or otherwise) are interested in a specific return, the report does a nice job of highlighting a more nuanced look at the reasons people support various projects and campaigns, reasons that can certainly overlap with — but are not dependent on — a specific financial outcome:
We are all VCs now – microVCs – whether we choose to take up that option or not. Crowdfunding has created a new environment with a different dynamic. It really does mean that the things that people want can get made, including things that banks, investors and VCs might never touch – for reasons that make sense for them but impoverish the wider community and society. MicroVCs, on the other hand, fund things for very different reasons. We fund all sorts of stuff that we want to succeed, for all sorts of perfectly valid reasons: often because we want one, sometimes because we want it to happen and sometimes because it’s a good thing for our community. Sometimes even when we know there is a high risk of failure.