A Kick Or A Start? Gender Disparity Evidence Of Winning A Kickstarter On Future Funding
Abstract
The gender disparity in the ability of entrepreneurs to raise funding for their startups has been a central question in the Entrepreneurial Finance literature. While most studies have focused on debt and angel financing, this paper explores gender-based discrimination in online crowdfunding, which has become one of the primary methods for “new” entrepreneurs to acquire financial support. Additionally, it also identifies the causal effect of acquiring funding on future outcomes for entrepreneurs. Using data from Kickstarter, the research investigates the effect of successfully completing the first online crowdfunding campaign on an entrepreneur's ability to raise funding in the future. The analysis employs a regression discontinuity design to address the issue of non-random assignment of campaigns ran by entrepreneurs by comparing those that just fail to receive funding versus those that just complete their first campaign.According to my findings, successfully completing the first Kickstarter campaign results in a substantial increase of $2,858 (equivalent to a 76% increase compared to the mean) in future funding. However, for female entrepreneurs, successfully completing their first project yields a comparatively smaller increase of $1,251 in raising funds via crowdfunding, as opposed to their female counterparts who fail to finish their campaigns. In contrast, male entrepreneurs observe a greater increase of $1,775 in raising capital. In conclusion, the study suggests that although online crowdfunding can serve as an effective capital-raising tool for female entrepreneurs, gender disparities persist.
This paper adds to the literature on the determinants of successful entrepreneurs and highlights the need for further research to understand and address gender disparities in entrepreneurship. This study provides valuable insights for policymakers, entrepreneurs, and investors interested in promoting gender equality and supporting female-led startups.