Tech Transfer eNews Blog

Study finds gender is the biggest determining factor in start-up fundraising


By Jesse Schwartz
Published: February 24th, 2021

A recent study by researchers at Santa Clara University (SCU) finds that, for start-up founders, gender has the greatest impact among factors that determine access to funding.  And, you guessed it: Women end up with the short end of the stick.

“Companies with male CEOs receive greater funding across all continents and U.S. start-up hubs compared with companies with female CEOs,” the study reports.

The researchers examined 48,000 start-ups across 20 different industries including healthcare, data, energy, advertising and gaming. According to the study, male-only teams attracted more funding in 19 of those industries.

Mixed-gender teams were also found to perform well — as long as they were led by a male CEO.

The study serves as a reality check to the assumption that start-up fundraising will grow increasingly progressive as general awareness of gender bias grows across the industry. If anything, the situation has only gotten worse, the authors argue.

“Compared with 2019, the first quarter of 2020 saw a decline in the proportion of deals made with female and mixed-gender teams and funding allocated to female teams,” says the report. “In the third quarter of 2020, funding given to female-only teams dropped to 1.8% with mixed-gender teams receiving just 11.1%.”

As a solution, the authors recommend that VC firms create mandates to invest in female-led companies, which would likely require the firms to hire women as partners and leaders.

“Investing in women-led, mixed-gender teams should allow investors to benefit from the performance boost of gender diversity, while helping to correct the long standing bias against female business leaders,” the authors write. “Investors with expertise to lead early stage deals applying such practices can further reap the benefit of early investing, receiving large equity in promising deals.”

Laura Lenz, partner at the firm OMERS Ventures, says she’s seen a few signs of positive change. Having spent more time at home because of the pandemic, some of her male colleagues have expressed a new appreciation for the dual role their wives play in both working and taking the lead at home.

“Maybe one of the enduring shifts we will see as a result of the pandemic is a more equitable split between men and women at home,” Lenz says. “In the meantime, I will do my utmost to ensure my door is always open to female founders — and in fact any under-represented founders. I’m a firm believer that being inclusive will make me a better investor and contribute to my ability to drive outsized returns.”

Source: Forbes

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