Tackling gender bias in equity crowdfunding: an exploratory study of investment behaviour of Latin American investors

Abstract

Purpose Belonging to the financial technologies’ companies, equity-based crowdfunding platforms offer investors the opportunity to become shareholders through the purchase of small equity stakes of new innovative ventures. This paper aims to investigate gender-related differences in the behaviour of investors in firms seeking equity financing in Latin America. Design/methodology/approach Using a unique database, with combined information from different equity crowdfunding platforms in Brazil, Chile and Mexico, the authors study the population of 492 projects between 2013 and 2017. To analyse the relationship between investors’ gender-related differences and equity crowdfunding investment, this paper applies Poisson regression. Findings Results suggest that the probability that an investor finances a firm is based on gender bias. Investors prefer firms led by entrepreneurs that are similar to them in terms of gender. Furthermore, the authors find evidence that both female and male investors are risk-averse and are more likely to invest in the equity of firms that are older and offer a higher percentage of equity. However, female investors are associated with firms that are on average older and offer 0.02% more equity. Practical implications These findings have implications for crowdfunding platforms managers when selecting their target companies and policymakers when defining political actions to promote greater use of equity crowdfunding among female entrepreneurs and decrease barriers hindering women’s access to investment. Originality/value Unique in its proposition and data usage, this study sheds light on the relationship between investors and entrepreneurs in the Latin American equity crowdfunding market.

Does Gender Equality Matter? – Examining Antecedents of Crowdfunding Backers’ Intentions in a Gender Equal Society

“…Unsurprisingly, this pattern is also consistent in studies specifically examining gender differences in investment behavior (Serwaah & Shneor, 2021), which is subjected to risks arising from substantial information asymmetries between fundraisers and investors (Glücksman, 2020; Lu et al, 2021; Sewaid et al, 2021). Similarly, research in the context of crowdfunding shows that women tend to invest in lower risk assets (Hervé et al, 2019), as well as in equity campaigns presenting financial indicators congruent with signals of lower risk investments (Cicchiello & Kazemikhasragh, 2022; Mohammadi & Shafi, 2018). While reward crowdfunding is not associated with the same degree of risk as those in financial investments, it nonetheless involves a degree of risk of non-delivery or deviations from campaign promises (Appio et al, 2020; Macari & Chun Guo, 2021; Seyb, 2022).…”

Backer behaviors – changing investment dynamics in equity crowdfunding markets

“…The presence of investment uncertainty triggers different backer behaviors. This has been studied regarding motives, evaluations and backer types (Cholakova and Clarysse, 2015;Moysidou and Spaeth, 2016;Gunther et al, 2015;Hornuf and Neuenkirch, 2017;Abrams, 2017;Olsson, 2021;Cicchiello and Kazemikhasragh, 2022). However, few studies have been conducted on the implications of investment dynamics.…”

Should gender be a determinant factor for granting crowdfunded microloans?

“…In addition there is recent research (Cicchiello and Kazemikhasragh, 2022), which hightlights several implications for crowdfunding platform managers in the selection of their target companies and policymakers when defining political actions to promote a greater use of equity crowdfunding among female entrepreneurs. These implications should remove some of the barriers to the granting investment capital to women.…”