How Trump’s Anti-Immigrant Rhetoric Crushed Crowdfunding for Minority Entrepreneurs

Another interesting study. Words matter:

What does fearmongering about immigration have to do with crowdfunding new ideas on Kickstarter?

For Black, Asian, and Hispanic entrepreneurs, such rhetoric can undermine fundraising efforts, making it even less likely that new ideas will come to fruition, argues Harvard Business School Professor William Kerr. In a new paper, Kerr and his collaborators shed light on how discrimination affects fundraising, and ways crowdfunding sites, entrepreneurs, and investors can take action.

Minority business founders already typically face a fundraising disadvantage compared to their white counterparts, but that gap triples during periods of high public anxiety over immigration in the United States.


Banks have historically rejected loan applications from Black, Asian, and Hispanic small-business owners at higher rates than for whites, according to Federal Reserve data, potentially driving some to alternative sources of capital, like Kickstarter and other crowdfunding sites. The pullback in support noted in Kerr’s research is national in scope, taking place in cities like Seattle and New York, with reputations as progressive bastions, as well as in more conservative-leaning locales.

“When there is the greatest anxiety, we see this funding shortfall,” says Kerr, the D’Arbeloff Professor of Business Administration. He cowrote the paper with John (Jianqui) Bai, an associate professor of finance at Northeastern University, and Chi Wan and Alptug Yorulmaz, associate professor and graduate research assistant, respectively, at UMass Boston.

Measuring fear during the Trump era

The paper looks closely at two different sets of data. The first is the Migration Fear Index, which counts the number of newspaper articles that include at least two terms associated with the debate over immigration, such as “migrant, asylum, refugee,” and “human trafficking,” as well as “anxiety, panic, bomb, crime, terror, worry, concern,” and “violent.”

Kerr and collaborators then compared the quarterly fluctuations of the Migration Fear Index from 2009 to 2021 to efforts by minority entrepreneurs to raise money on Kickstarter, which has raised $7.3 billion for popular projects such as opening restaurants and publishing comic books.


The fear index surged when former President Donald Trump, with a barrage of anti-immigrant rhetoric, launched his first campaign in 2015, and continued speaking disparagingly of immigrants through his first year in office. Overall, minority entrepreneurs were less likely to meet their fundraising goals during periods like this of high anxiety over immigration, the study finds.

“You can compare quarters within the same year and find the connection between the hostile rhetoric and greater difficulty in fundraising for minority creators. You can also follow individual minority creators over time and see ups and downs in their rates of success,” Kerr says.

Certain groups feel it more

The heaviest impact was felt by groups that found themselves the most frequent targets of hostile rhetoric.

Hispanic entrepreneurs or creators suffered the sharpest pullback in support from financial backers on Kickstarter during the 2016 election cycle, while Chinese ethnic creators in the US faced a harder time meeting their financing goals during “episodes of Asian hate,” including Trump’s use of the phrase “Chinese virus” to describe COVID-19.

By contrast, while Black entrepreneurs had lower success rates overall in raising money, support did not fluctuate as dramatically with the ups and downs of the Migration Fear Index.

The paper finds that even during periods of low anxiety, minority creators are 2.4 percent less likely to achieve their fundraising goals on Kickstarter. But during periods of higher anxiety, minorities experience an 8.2 percent lower success rate.

Where and why it’s happening

Meanwhile, Kerr and his co-authors considered—then knocked down— several different theories for the decline in support, including the idea that funding support from minority communities may be pulling back during times of heightened tension around immigration or that creators might be posting different types of projects.

Rather, the evidence points to another hypothesis, that spikes in anxiety over immigration trigger a broader, nationwide retraction of support among backers of Kickstarter projects. Most backers are white, the study contends.

The decline in support for minority creators during increases in the Migration Fear Index are most pronounced in conservative counties. But Kerr and collaborators “also find sizable impacts in very liberal counties,” according to the paper.

“A majority of financial backers for typical Kickstarter campaigns live more than 50 miles away from the creator they support, tending to reside in big cities like Seattle and New York,” the researchers note.

Drawing lessons from the data

The report builds upon previous research on “systemic racial bias in entrepreneurial finance,” illustrating a “more direct” connection between shifts in public attitudes and struggles experienced by minority creators in raising money for new ventures, Kerr and his co-authors write.

Still, the study does not have data on potential backers who looked at pitches by minority entrepreneurs, only to take a pass on their proposals. That, in turn, made it hard to draw any conclusions on whether these decisions by white backers were driven by conscious racism, unconscious racism, or a combination of the two, according to Kerr.

However, there might be ways for Kickstarter and similar platforms to offset or at least mitigate some of these tendencies and trends.

Minority entrepreneurs are less likely to have projects promoted as “staff picks” on Kickstarter during period of hostile rhetoric, which is not the case normally. That is likely driven by the algorithms used, which tend to pick up on momentum, Kerr says.

Given this research, platform operators could keep an eye out for this trend and look at ways of compensating for it in the algorithm, Kerr explains.

“One of the hopes for crowd funding is that it will democratize access to capital from those previously excluded,” the authors write. “Prior work has shown that discrimination still exists on crowd-funding sites … we take a step further in understanding how minority creators can suffer acute funding shortfalls in moments when anxiety over immigration is high.”

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