40 Pages Posted: 17 Apr 2017
Date Written: April 14, 2017
It has been well-documented that women are underrepresented among entrepreneurs funded by early stage equity investors and these investors are predominantly men. In this paper, we explore whether investors play a role in explaining the gender gap in entrepreneurship. To do so we use a unique dataset obtained from AngelList, which allows us to observe detailed investor-founder interactions for a large sample of fundraising startups, some of which succeed in raising capital and some of which fail. We find that, even before investors get involved, only 16% of those seeking capital are women, suggesting that non-finance factors likely play a significant role in explaining the entrepreneurship gender gap. Among those who do seek capital, we find that female founders are roughly as successful as observably similar male founders in garnering attention and funding from investors. However, when we decompose our results by investor gender, we find evidence of segmentation: female (male) founders garner less interest from male (female) investors than male (female) founders, but this is offset by the fact that they garner more interest from female (male) investors. Additional tests suggest that the gender segmentation we observe is due to homopholistic preferences rather than within-gender screening/monitoring advantages. Regardless of the mechanism, our results suggest that an increase in female investors is likely necessary to support an increase in female entrepreneurship.
Keywords: gender, entrepreneurship, angel investing, venture capital
Suggested Citation: Suggested Citation
Ewens, Michael and Townsend, Richard R., Can Access to Capital Explain the Entrepreneurship Gender Gap? (April 14, 2017). Available at SSRN: https://ssrn.com/abstract=2953011 or http://dx.doi.org/10.2139/ssrn.2953011