Can Equity Crowdfunding Mitigate the Gender Gap in Entrepreneurship? PRELIMINARY DRAFT

The gender gap in entrepreneurship is well-documented. Firms founded by females raise significantly less start-up capital, which hurts their chances of success. There is empirical evidence that the gap can be partially explained by factors in the financial industry and by female entrepreneurs’ preferences for particular types of financing. A new method of acquiring startup capital, equity crowdfunding, has the potential to lower this gender gap by opening access to a broader variety of investors. Using a novel dataset of startups and their funding sources compiled from CrunchBase API, I analyze whether the legalization of general solicitation (public advertising of raising capital) and equity crowdfunding through Title II of the JOBS Act in 2013 had an impact on female entrepreneurship. I argue that these changes to the entrepreneurial financing market had a larger impact on females due to access to a larger variety of investors and changes to requirements in relationships between investors and entrepreneurs. Estimates from a triple difference-in-differences model using the variation in competition in the traditional banking sector indicate that Title II increased aggregate funding on average by 22% more for female entrepreneurs located counties with market concentration of traditional banking was one standard deviation above the mean. JEL classification: J16, M13, L26.