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Gender homophily and local bias in equity crowdfunding

Author

Listed:
  • Dandan Wang

    (Carl von Ossietzky Universität Oldenburg)

  • Jörg Prokop

    (Carl von Ossietzky Universität Oldenburg)

Abstract

We investigate gender-specific local biases among investors in equity crowdfunding. Based on data from a major German crowdfunding platform, we find that domestic investors favour ventures that are geographically closer to their own place of residence. This bias is particularly evident among female investors, although it is partially offset by gender homophily, whereby female investors favour companies with women in the top management team. Finally, we show that the introduction of the German Small Investor Protection Act may have exacerbated local biases in the German crowdfunding market, particularly with respect to firms with female management. Overall, our results suggest that establishing their companies in close proximity to a large number of potential female crowd investors may help improve female entrepreneurs’ chances of attracting equity crowdfunding investment.

Suggested Citation

  • Dandan Wang & Jörg Prokop, 2025. "Gender homophily and local bias in equity crowdfunding," Small Business Economics, Springer, vol. 64(3), pages 805-836, March.
    • Handle: RePEc:kap:sbusec:v:64:y:2025:i:3:d:10.1007_s11187-024-00949-5
    DOI: 10.1007/s11187-024-00949-5
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    More about this item

    Keywords

    Equity crowdfunding; Local bias; Venture financing; Geographical distance; Female entrepreneur; Gender effects;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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