Persuading Investors: A Video-Based Study

Race and Gender in Entrepreneurial Finance

“…Information asymmetries about types or quality are the starting point for numerous theories of discrimination (see section 5). Next, various investors -angels, individuals, and VCs -decide on "gut feelings" or after personal meetings with entrepreneurs (Hu and Ma, 2021;Gompers et al, 2020). These subjective decisions are ripe for the emergence of bias or stereotypes.…”

Gender and race in entrepreneurial finance

“…Information asymmetries about types or quality are the starting point for numerous theories of discrimination (see section 5). Next, various investorsangels, individuals, and VCs -decide on "gut feelings" or after personal meetings with entrepreneurs (Hu and Ma, 2021;Gompers et al, 2020). These subjective decisions are ripe for the emergence of bias or stereotypes.…”

“…Ideally, this outcome data would be sourced from outside the researcher's own sample. Hu and Ma (2021) are one of the first to take this path in entrepreneurial finance.…”

“…First, evidence from founder video investment proposals (i.e., pitches) shows that investors respond to intangible characteristics, such as positivity, and treat genders differently in funding decisions based on delivery characteristics (Huang et al, 2021;Hu and Ma, 2021). Brooks, Huang, Kearney, and Murray (2014) show in multiple settings that investors prefer the same pitches when presented by men, while attractiveness of the entrepreneur has additional predictive power.…”

“…For those studies that can identify the characteristics of investors, there is clear evidence of matching by own-gender and some evidence in favor of taste-based explanations. The literature's next steps involve collecting better data about the supply and demand-side of the market, possibly adding surveys to assess expectations, stereotypes, and true outcome distributions Hu and Ma, 2021).…”