Women are more effective crowdfunders than men, according to a recent study by Haas School of Business assistant professor Andreea Gorbatai set to be submitted for peer review next week.
Gorbatai’s paper “The Narrative Advantage: Gender and the Language of Crowdfunding” delves into project-funding through small payments from large numbers of people. The study found that successful crowdfunding campaigns depend heavily on linguistics, or how well-written a pitch is — an area, the study shows, where women are more proficient than men.
“Crowdfunding has a language-based platform,” said co-author Laura Nelson, a postdoctoral research fellow at Northwestern University. “We found that women are naturally better storytellers. They use language to build relationships with the audience. They are better to draw the crowd into their story.”
According to Gorbatai, the idea of what a successful entrepreneur looks like is often biased against women, but female entrepreneurs online — where gender can remain secret — present a different narrative.
“When interactions happen online, gender is muted,” Gorbatai said. “Language is more important if we could hide gender (and) women will do better because of the language they use.”
Women appeal to investors’ emotions and therefore connect with their audience better than men, Gorbatai said. This technique persuades online investors to donate money, especially when they admire the products, Nelson said.
The study shows that when you remove human biases by converting the form of funding to a text-based venue where gender is muted, women are more likely to succeed.
“In a way, crowdfunding is like a curtain,” Gorbatai said. “(It’s not) about how all entrepreneurs look but about quality of the product.”
The overall importance of the study, according to the researchers, is its ability to further promote gender equity by showcasing women’s ability to advertise their original products as effectively as — and often more effectively than — men.
Danae Ringelmann, co-founder of Indiegogo and UC Berkeley alumna, said she is not surprised by the research’s findings, as Indiegogo campaigns that use vivid, upbeat language and a sense of inclusivity are typically more successful.
“People showcase the impact that they are trying to make, and funders get attracted to that passion,” Ringelmann said.
Ringelmann said that she shared the findings of Gorbatai and Nelson’s paper with her team at Indiegogo and that she hopes to utilize the knowledge in the future.
The academic paper is under final review by the researchers before its submission. The peer-review period could take about three months before publication.
“It is a lot easier to have bias,” Ringelmann said. “Crowdfunding gets rid of that and gets straight to the point at what we do and why you should join in.”