According to a recent report by PitchBook, initiatives to counter male bias and to increase female-founded or co-founded companies are starting to show their success. Research by Michael Ewens (California Institute of Technology) and Richard R. Townsend (Rady School of Management) supports these initiatives. They investigated whether male investors have a bias against women when they seek to make investments in startups. The scholars used a unique, proprietary dataset from AngelList that shows interesting details on gender in fundraising startups. The authors’ key finding is that female entrepreneurs are less successful than their male competitors in raising investments from male financiers. Gender differences, or quality of the startups involved, do not seem to drive results. To boost more female entrepreneurship, the results suggest increasing the number of female investors to overcome the observed bias against female founders. This will prove difficult, however, because early stage investors are usually drawn from a pool of former entrepreneurs that – at least for now – are predominantly male.
Read the full paper “Are Early Stage Investors Biased Against Women?” by Michael Ewens and Richard R. Townsend (2019) in the Journal of Financial Economics at ScienceDirect.