Huffpost Business

Women Are Killing It On Kickstarter

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Female entrepreneurs looking for funding may want to just skip pitching to the elite boys club of venture capital and go straight to the Internet instead.

Companies led by women are more likely than to reach their fundraising goals on crowdfunding site Kickstarter than companies led by men, according to a study of 1,250 projects by researchers at New York University and the University of Pennsylvania. That is true even though men make up the majority of people giving money on the site. The study hints at how women can benefit when the playing field is more even than it is in male-dominated venture capital.

“The system has been unfairly stacked,” said Ethan Mollick, a management professor at Penn’s Wharton School of Business and co-author of the paper. The men handing out the vast majority of VC cash tend to stick to their networks of buddies, who are also mostly male, Mollick pointed out. "It’s all very tight-knit, so anything you can do to blow those networks up helps a lot.”

The study looked at projects in five categories: Fashion, publishing, film, tech and games. Surprisingly, female-led businesses outperformed male-led ventures by a wider margin in tech -- which is dominated by male founders and male backers -- than in fashion, an industry typically dominated by women.

That difference was largely due to women pointedly backing female entrepreneurs to help give them a boost in the industry, the researchers found.

“It’s not really enough to have more women venture capitalists," Mollick said, "you need women venture capitalists who are trying to help other women.”

These Kickstarter results are essentially the opposite of what happens in the rest of the fundraising world. When female business owners seek funding from traditional sources like banks or venture capitalists, they're typically less likely to get it than men, Mollick said.

The gender imbalance is particularly bad in tech. Female-led companies get as little as 7 percent of VC funds, according to a 2004 study from the Kauffman Foundation. Experts speculate that’s because women make up such a small share of higher-ups at VC firms. Many women seeking funding from the largely male world of venture capital have reported being subject to inappropriate questions at best and harassment at worst.

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