PwC (No. 4 on the DiversityInc Top 50 Companies list) and The Crowdfunding Centre launched their joint report, Women Unbound: Unleashing female entrepreneurial potential, which explores the experience of women in achieving finance raising success through seed crowdfunding compared with more traditional finance raising routes.
The report findings, which are based on two full years of seed crowdfunding data (2015-16) tracked by The Crowdfunding Centre, include the results of over 465,000 seed crowdfunding campaigns from nine of the largest crowdfunding platforms globally.
The report finds that while men clearly use seed crowdfunding more than women, women are more successful at crowdfunding then men. Seventeen percent of male-led campaigns reach their finance target, compared with 22% of female-led campaigns. Overall campaigns led by women were 32% more successful at reaching their funding target than those led by men across a wide range of sectors, geography and cultures.
Crowdfunding is a disruptive innovation which has provided new routes to funding for individuals, startups and growth businesses. It enables them to engage and interact directly with the market and with thousands of backers, supporters, customers and potential partners like never before.
Seed crowdfunding is the use of ‘rewards based’ crowdfunding platforms to fund the creation, launch or development of new businesses, products and services where backers pay upfront for a product, service or project. Since its inception, seed crowdfunding’s footprint has continued to spread with the levels of finance raised through the nine platforms analysed in this report jumping from $10 million in 2009 to over $767 million in 2016, with backers from over 200 countries.
Women-led campaigns performed better in terms of securing their funding goals than campaigns led by men when we segregate the data for every sector and every country. In countries with the largest volumes of seed crowdfunding, the UK and the US, 20% of male-led campaigns reached their targets. Yet female-led campaigns outperformed, with 24% of women in the US and 26% of women in the UK successfully reaching their campaign funding target.
This trend continues in countries where seed crowdfunding is not yet as wide-scale or successful. For example, 11% of female-led campaigns in Africa were successful compared with 3% of male. And in E7 countries (China, India, Brazil, Mexico, Russia, Indonesia and Turkey), 10% of female-led campaigns reached their goals compared to 4% of male-led campaigns.
Even in what some consider to be more masculine sectors, for example technology, where we see nine male seed crowdfunders for technology ventures to every one female crowdfunder, 13% of women were successful in achieving their funding goal compared to just 10% of men. Similarly, in the digital technology sector, where there are three male-led campaigns to every one female-led, women achieved a 16% success rate compared to just 9% for men.
Co-founder and CEO of The Crowdfunding Centre, Barry E James says:
“Who could have expected that when the middle-men are removed from the equation, and women and men entrepreneurs get equal and direct access to the market, it would turn out that women would, immediately and decisively, outperform the men, across the board?
Shining a new light on the endemic imbalance and the causes that have long fueled limited access to finance for female entrepreneurs via traditional financing routes. That only half as many women currently embark on a crowdfunding campaign is undoubtedly a reflection of low expectations stemming from the same roots. So, in that light, it’s time to readjust not just our expectation and perceptions but our attitudes, institutions, behaviours – and the way we make decisions.”
Female crowdfunding success is in stark contrast to established funding mechanisms for business startups and growth in which women-led businesses continue to face barriers to accessing finance.
Manoj Kashyap, PwC Global FinTech Leader, says:
“The findings of our Women unbound report pose a strong challenge to existing entrepreneurial and business norms by seriously questioning whether there are deep-rooted biases that are preventing greater access to funding by female entrepreneurs. It is extremely positive to see that the growth and global reach of seed crowdfunding presents several major opportunities, each with the potential for major social and economic impact. Including the understanding and acceptance that seed crowdfunding is now a well-established environment through which women can thrive.”
There is however room for even greater progress.
Significantly more men are seed crowdfunding than women and as result men raise substantially more finance via this channel. Men are also more ambitious in establishing higher funding goals than their female counterparts and we see them dominate in the highest funded campaigns by sector. The report highlights that 63 campaigns raised over $1 million but of these, only seven (11%) were led by women, with the most funded campaign created by a woman placing number 18 on the list.
Says Sharmila Karve, PwC Global Diversity Leader:
“Significant opportunity still remains for women to become more active and represented in crowdfunding and to be more ambitious when establishing their finance raising goals. We hope the success of female crowdfunders highlighted in this report motivates more budding and established female entrepreneurs to explore crowdfunding and invoke confidence and belief in their entrepreneurial talent and opportunities.”
This report aims to create visibility of the potential barriers that female-led businesses and entrepreneurs appear to have long faced in accessing finance; highlighting that opportunities for women entrepreneurs do not seem to have been equal. But thanks to crowdfunding, entrepreneurs can now access the market directly – and this makes a huge difference.
Above all, this crowdfunding data shines a more visible light on both the challenges and opportunities to which we must respond. Eradicating any potential barriers that seem to be more prevalent in traditional finance routes provides opportunities that will benefit women and men, business and society. The report outlines actions that governments, funders, business advisers, educators, entrepreneurs, women and men can take to seize these opportunities and eradicate any such barriers.
Read the report: Women Unbound: Unleashing female entrepreneurial potential