Women entrepreneurs are racing ahead in the tech sector, but exactly how they’re doing so is perhaps less clear.
Traditional sources of funding, such as angel investors or venture capitalists, tend to be male-dominated. However, the newest form of business finance – crowdfunding – is proving a boon for female entrepreneurs.
It’s well known that women face barriers raising investment for startups. According to a study published earlier this month by Fundera, female entrepreneurs receive less funding than men, and at higher interest rates.
But earlier this year, a study by the University of Berkeley (pdf) found that on crowdfunding platform Indiegogo more than 47% of campaigns reaching their funding goals are run by women. This is four times higher than the proportion of female-owned businesses in receipt of venture capital.
Crowdcube co-founder and chief marketing officer, Luke Lang, says women are more successful on that platform too. “They often run consumer businesses with strong brands, which could give them an advantage, and they also stand out from the male-dominated entrepreneur crowd.”
Evelina Sinkeviciute, a project manager at learning platform SmartUp, who has spent years studying the differences between male and female entrepreneurs, has her own ideas as to why this is happening.
Crowdfunders have more affinity for a product
“When meeting face-to-face with venture capitalists or angel investors, women might appear more vulnerable compared to men – with a soft voice or really gentle manners – which can be considered as a weakness,” she explains.
“Crowdfunding gets rid of all that. Women can shine showing their products, ideas, tell a great story and connect emotionally. That’s what women are great at doing.”
Of course, that’s not to say that many women haven’t successfully raised funding through angel investors. Olivia Sibony, co-founder of Grub Club, says she hasn’t experienced any gender bias herself. But she does offer some insight into why it might happen.
“My personal experience is that a small number of investors who are new to angel investing – and come from a traditional financial services background, such as hedge fund managers – seemed to find it a barrier that I was a woman,” she says.
“They asked a lot more questions about whether we were trying to run a ‘lifestyle’ business rather than a fast-growth business with views on larger expansion.”
But while women continue to fight an uphill battle to beat gender bias in face-to-face meetings, what is it about crowdfunding that allows them to succeed?
Estelle Lloyd is co-founder of children’s online safety app Azoomee and is currently in the middle of running a crowdfunding campaign. “With crowdfunding I think the decision to invest is a little more visceral,” she says. “‘The crowd’ is definitely interested in a financial return, but above all they want to feel an affinity with the product and that they are contributing to its success.”
Interestingly, Lloyd and her business partner (and husband) have divided their roles in the company to play to each of their strengths. “I try to get investors to really believe in the creative vision and the company’s mission” she explains. “My husband tends to be much more direct in seeking investment, focusing on the financial return rather than why Azoomee is so brilliant.”
It’s open and accessible
Skill sets aside, there are other more pragmatic reasons why women are finding it easier to get backing via online platforms, says Crowdcube’s Lang. “Men are still very much in the majority in a room full of angel investors. Most pitching events happen in the evening, which can be tricky if you have a family,” he suggests.
“The openness, 24/7 accessibility and lack of traditional stereotypes in crowdfunding can make it an appealing choice.” Put simply, crowdfunding levels the playing field.
Sinkeviciute welcomes this but says we need to do more to eradicate gender biases – both online and off. “By talking more and by showing more success of female entrepreneurs we can aim for a change, to get rid of subconscious bias one day” she says.
“Also, if there were more women venture capitalists and angels, it would help to improve the situation. Being able to relate to a person and identify yourself with them is really important.”
Sibony finds it’s all about focusing on what matters: your business. “If you can remove the gender barrier and focus purely on the business, explain your vision clearly with a sensible strategy, and have a dynamic and driven team, the rest is just noise and can be overcome,” she says.
Content on this page is paid for and provided by Hiscox, sponsor of the Adventures in Business hub on the Guardian Small Business Network.
