Are early stage investors biased against women?

Abstract

We examine whether male investors are biased against female entrepreneurs. To do so, we use a proprietary dataset from AngelList covering fundraising startups. We find that female founders are less successful with male investors compared to observably similar male founders. In contrast, the same female founders are more successful than male founders with female investors. The results do not appear to be driven by differences across founder gender in startup quality, sector focus, or risk. Given that investors are predominately male, our results suggest that an increase in female investors is likely necessary to support an increase in female entrepreneurship.

Networking Frictions in Venture Capital, and the Gender Gap in Entrepreneurship

“…Bernstein et al (2017) find that revealing a small amount of information about a startup team to angel investors increases their probability that the investor demonstrates interest in the company by 13 percent. Ewens & Townsend (2019) show that female-led companies are 42 percent less likely to be shared by male investors. Finally, González-Uribe (2020) shows that after startups join investors' portfolios, they increase information exchange with other members of the portfolio by 60 percent.…”

“…Our ability to examine this stage of the venture is important because prior work suggests that the gender gap in high-growth entrepreneurship originates early in the startup lifecycle, at or near the moment of founding. Women comprise only 16 percent of the entrepreneurs seeking funding inEwens & Townsend (2019)'s data, which is close to their overall share of VC-backed startup founders.…”

“…Between 2008 and 2020, the share of annual U.S. VC capital raised by female founders ranged between 1.7 percent and 2.7 percent, with no upward trend. 3 A growing literature, including Becker-Blease & Sohl (2007), Scott & Shu (2017), Gornall & Strebulaev (2018), and Ewens & Townsend (2019) has documented the gap in various ways, but has never directly addressed 1 The NVC is Harvard's flagship new venture competition and a key gateway to VC-backed entrepreneurship after HBS. Many successful founders, including those of 'unicorn' startups such as Rent the Runway and Oscar Health, have been participants in the NVC.…”

“…Our paper offers three key distinct contributions relative toEwens & Townsend (2019), who use data from AngelList to find evidence that angel investors prefer to invest in founders of their own gender. First, we focus on networking frictions rather than gendered preferences.…”

What Motivates Innovative Entrepreneurs? Evidence from a Global Field Experiment

“…Hamilton, 2000). Additionally, while one strand of the literature documents a 'gender gap' in entrepreneurship (Bapna and Ganco, 2018;Howell and Nanda, 2019;Kanze et al, 2018;Ewens and Townsend, 2018;Brooks et al, 2014;Ding et al, 2013;Guzman and Kacperczyk, 2019;Lee and Huang, 2018), this work often makes the implicit assumption that motivations themselves are not different across genders. This assumption has implications for both the theoretical and the econometric approach adopted.…”