Birds of a feather flock together and get money from the crowd

In constructing online alternative finance instruments as a new form of financial democratization and financial inclusion, this article aims at verifying the presence of similarity effect in equity crowdfunding investments. Discussion focuses on ethnic and gender similarity between the seekers and investors that sustained the project. Our analysis is based on 5,996 personal investors that have participated in 81 equity crowdfunding campaigns, on Crowdcube, a British equity crowdfunding platform from 2011 and 2016. Results show that in equity crowdfunding gender and ethnic similarities play different role based on investors’ characteristics - gender, ethnicity and the combination of two. In particular, ethnic similarity positively influence the level of amount invested by both female and male investors belonging to an ethnic minority. Even if female investors tend to prefer male company, their preference changes if a female proponent belonging to an ethnic minority runs the company. From a practical perspective, our findings shed new light on how individual characteristics can be important factor in financing situations. Results allow entrepreneurs and equity crowdfunding platforms to understand better potential investor behaviour and highlights the role of equity crowdfunding as tool for minorities’ financial inclusion and women entrepreneur empowerment.