It is often said that crowdfunding has democratised access to business funding. It provides an opportunity for startup founders who do not have “the right connections” with venture capital fund decision-makers, family investment firms, or other institutional investors. This remains particularly true for minority groups who do not match the general VC fund manager demographics - white and male. These minorities include over half the world’s population: women. This article gives an overview of the scale of VC bias against women-led and women-only startups, and looks at how much crowdfunding can provide female entrepreneurs with startup investment funding.

VCs are letting down female founders

One of the United Nation’s seventeen Sustainable Development Goals is Gender Equality and Women’s Empowerment. Yet in February 2022, Tessa Clarke, cofounder of the successful food recycling platform OLIO, wrote in an article for Sifted: “at last count female founders secured just 1.1% of all VC investment in Europe.” Tessa had experienced her own challenges when launching OLIO, saying that being a female-founded startup team was a sobering experience.

There is widespread agreement with this. UK investment specialist Julia Elliott Brown, author of the book Raise: The Female Founder's Guide To Securing Investment, helps women-led startups get funding. In a blog post she similarly quoted the European Investment Bank as saying “female entrepreneurs pulled in only a tiny fraction – 1% – of venture capital investment in 2021.” Brown went on to say she has discovered that casual sexism and misogyny isn’t confined to a small group of women, but is sadly something nearly every female founder experiences. This is despite studies showing that even though women get half the investment capital compared to men, their companies deliver twice as much return on investment.

In 2021, US companies founded solely by women attracted just 2.4% of the total capital invested in venture-backed startups. Deborah Gibbins, COO at Texas-based Mary Kay – which was the sixth largest network marketing company in the world in 2018 – says women in business continue to face obstacles worldwide resulting from unequal access to capital.

In India, the sixth economic census by the Ministry of Statistics and Programme Implementation showed women comprise just 13.76% of the total entrepreneurs in India. Meena Ganesh is Co-Founder and Chairperson at Portea Medical, the fastest growing provider of in-home medical care in India and Malaysia. She told the Economic Times of India that the investor community’s preponderance of men  can create an unconscious bias against women entrepreneurs wishing to raise money.

Results from an exploratory study of investment behaviour of Latin American investors, released in February 2022, found that investors prefer firms led by entrepreneurs who are similar to them in terms of gender. It then stands to reason that if most of the VC decision-makers are male, male-led and male-only startups are going to continue receiving the lion’s share of investments. This is echoed by Tessa Clarke of OLIO, who believes that it is only by changing the composition of the gatekeepers of capital [VC decision-makers] that women stand any chance of changing the distribution of capital.

How much can crowdfunding plug the gap?

Whether to use crowdfunding or seek VC backing is not a binary choice. Crowdfunding often occupies the fundraising space between more than friends and family can provide, and not enough to usually interest a VC fund manager. However, equity crowdfunding platforms will demand the reassurance of a lead investor, or a number of them, who are providing a significant part of the total fund raise target. The platforms only charge a fee if a crowdfunding project succeeds, so they will naturally select the ones that appear to have the best chance of hitting their target.

At the same time, there are a growing number of investors in VC funds who want to be involved in startup activity at an earlier stage of their development, to secure a higher return on their investment. A solution that serves both sets of stakeholders, startup founders and investors, has been the development of VC micro-funds. Where a VC is the lead investor, startups are then using VC funding and crowdfunding in the same round. There are other sources of lead investors, including business angels and family funds.

Female founders are more successful at crowdfunding

More startups with male founders use equity crowdfunding than startups led by women, though women who have used crowdfunding have historically achieved a higher success rate. Research released by PwC in 2017 revealed that women are 32% more successful at reaching their seed crowdfunding target than men. Although now five years old, there isn’t any more recent research that shows this has changed. 

Acknowledged gender bias against women in entrepreneurial finance is also turned on its head in the context of reward-based crowdfunding, according to joint research conducted by two universities, one in Germany and one in the US.  

A Forbes magazine article in November 2022 stated traditional lenders have long underserved women-owned businesses: in 2021, women [business founders] received only 2.4% of venture capital funding. It continues by confirming that crowdfunding provides an essential alternative funding source.

Why do women perform better?

The founder of the London-based global angel investor platform Angels Den, Bill Morrow, has for years given anecdotal evidence that women are better at generating investment in startup businesses. In 2019 he wrote in his LinkedIn account: “Women are more emotionally intelligent, more collaborative, make team decisions based on logic rather than gut feel and when they do go with their intuition, it is normally right.” He went further, adding that the 60% of startups whose business plans cross his desk that do not have a woman at all in their management team are plain stupid.

A startup advisor and researcher based in The Netherlands echoes some of these points, and adds: “Women are better at taking on fewer risks and finding the right amount of investment to get them started.” He also found that women tend to have better networks to contact about their crowdfunding project to begin with, and are more likely to build a relationship with their new crowdfunding backers.

Specialist women-only platforms

Investors who particularly seek opportunities to take equity in startups led by female founders can turn to a number of specific crowdfunding platforms.

BuildHerCrowd is a UK crowdfunding platform for Black women to raise capital to launch their businesses and bring their creative ideas to life. The platform was launched in 2019 at the start of the Covid pandemic. Co-founder Dami Soyoye said: “If we’re not going to get it [startup funding] from the banks, we’re going to look inwards and provide it for ourselves.”

New York-based IFundWomen is a comprehensive funding marketplace for women-owned businesses in the US, and for the people who want to support them by providing not only capital but also coaching and network connections. It was launched in 2016 by its founder and CEO Karen Cahn, and provides support for running reward-based crowdfunding projects.

On the US west coast, the FundDreamer platform is based in Los Angeles. It claims to be the world’s first 101% reward-based crowdfunding platform for women. It does not charge a fee, and even contributes a further 1% of the funds raised.

Fund Dreamer's founder Raj Rajkotia was born in India and migrated to the United States twenty years ago. In 2013, as he witnessed his own teenage daughter facing career decisions, he became aware of media coverage about the lack of diversity and women in the workforce. His response was to launch FundDreamer to help women turn ideas and dreams into successfully funded projects and businesses. It is now a global platform that accepts 139 world currencies, plus bitcoin. 

CrowdInvest is UN SDG-aligned

The CrowdInvest platform, headquartered in London, is a cross-border startup investment platform on a mission to connect investors from developed markets with startups from growth markets. The objective is to catalyse businesses concerned with environmental or social impact outcomes.

The initial spotlight will be placed on the UK-India corridor, and then expand to include emerging economies in southeast Asia, Africa and the Middle East. We will pay particular attention to nurturing founders from less privileged backgrounds, to generate inclusive, sustainable economic growth. Our transparent application process and due diligence procedures have no gender bias.

You can join the CrowdInvest waitlist today at to stay up to date with developments on how to be involved.