In recent research, Jason Greenberg of New York University and Ethan Mollick of the University of Pennsylvania’s Wharton School report that 65 percent of all women-led tech startups reached their funding goal on Kickstarter versus just 30 percent of men-led tech startups.

The question is why?

  1. Is it because women don’t like to pitch to investors directly and this indirect route is more feminine?
  2. Are there more female funders on crowdfunding platforms looking to fund women-led ventures?
  3. Is it because of the “activist’ female backers looking to jump-start women breaking into industries- like tech?

There are many crowd funding sites covering many investment classes; some are for accredited investors and some will allow anyone to invest. The Digital Capital Network (DCN) is institutional crowd funding; essentially an online library of deal-flow for institutional size investors. These can be either for-profit or nonprofit companies raising funds. For example, investors or issuers may find the latest raise for Wounded Warriors Project on the site in the process of raising $500 million with the end goal of access to higher education for veterans and their families, or you might find companies in the technology, real estate or equipment categories to name a few. On the other hand, CircleUp is an online investment platform (crowdfund) for the accredited investor that connects consumer goods and retail companies with accredited investors. CircleUp’s co-founder, Rory Eakin, reports that 70% of the women-led startups on the platform have raised money, vs 58% of companies started by men with equal-level raises. One reason for this, notes Eakin, could be that women are focused on sectors that serve women rather than tech which has been dominated by men. Consumer goods represent 20% of the US economy and Eakin reports the average raise on CircleUp is $1million. On the Digital Capital Network, raises are higher.

Many reports reiterate the concept that people invest in people like them.  Men fund men and women fund women, according to Rieva Lesonsky, CEO & president of GrowBizMedia and

This is in reference to the mostly white-male population of venture companies investing in people like them. With such a small percentage of women in the VC world, it’s no surprise the investment in women-led companies is small as well. The DCN is very interested in bringing female fund managers and business owners together with investors. In the crowdfunding area, research by Kauffman and Hebrew University in Jerusalem shows that 44% of investors on crowdfunding platforms are women; so it makes sense there would be more funding of women-led companies.

Crowdfunding allows entrepreneurs to find their audience. In the world of women-centric products and services, it makes sense that many companies serving the needs of women-only products are much more comfortable raising money via their tribe than in a hard-pitch room of male VCs and buttoned-up investors.

Take Miki Agrawal of Thinx, for example. She is co-founder of a start-up that plans to disrupt the feminine hygiene market with fashionable underwear and washable pads. The groundbreaking (as opposed to trash-making) solution also addresses the social issue that has kept many young women and girls from going to school during their “week of shame” who can’t afford tampons and pads. For every pair of undies Thinx sells in the United States, it donates seven washable, reusable pads to women and girls in Uganda.

“Tampons were invented in 1931 and aside from adhesive strips and wings on pads, there hasn’t been any major innovation in 85 years,” says Agrawal. “It’s time to change that — and to change the taboo.”

This further illustrates the value and interest in social impact when women make investments and when women use their start-up interests to solve social problems.

Still, discernment and is needed with crowdfunding as with all investments. Due diligence is very important and it’s no guarantee that woman-led or male-led companies will become more than an idea. Understanding the difference between crowdfunding platforms like Kickstarter, an accredited crowfunding platform like CircleUp or Crowdfunder, and institutional crowdfunding like the Digital Capital Network is also important. Kickstarter raises often send perks or offer a rewards-based incentive in exchange for funds raised, while the DCN, CircleUp and Crowdfunder offer bona fide equity/ownership. Lending Club facilitates small loans vs. investments or donations. Whether you are a fundraiser or an investor, it’s important to be aware of the latest updates in regulation. You can find out more about that on the SEC website.