The Minority Effect: Gender Stereotypes and Entrepreneur Financing
82 Pages Posted: 24 Jan 2019 Last revised: 3 Dec 2019
Date Written: December 1, 2019
Using administrative and survey-based microdata of start-ups in France, I examine gender differences in the external equity financing of entrepreneurs. First, I find evidence of a heterogeneous gender funding gap across sectors: female entrepreneurs are less likely to use external equity in male-dominated sectors, which represent most of the economy, but they are more likely to use external equity in female-dominated sectors. The observed gender funding gaps are not driven by the composition of founding teams or by differences across individuals regarding education, experience, ex-ante motivations or optimism. Second, consistent with the idea that the bar is set higher for minorities, I find that conditional on being backed with equity, female entrepreneurs overperform in male-dominated sectors and male entrepreneurs overperform in female-dominated sectors. The evidence is consistent with a simple model in which investors have context-dependent stereotypes.
Keywords: Entrepreneurs, venture capital, gender discrimination, beliefs, stereotypes
JEL Classification: G24, G41, J16
Suggested Citation: Suggested Citation