Do Female Investors Support Female Entrepreneurs? An Empirical Analysis of Angel Investor Behavior

Abstract

There is an ongoing debate on why female entrepreneurs face greater challenges than their male counterparts do in raising capital for their companies. Rooted in homophily – theory supporting the notion that women support women – is the argument that there are not enough female investors to support female-led firms. In the context of accredited investor-investee exchanges, we explored whether the gender of investor and the gender of investee’s CEO are related. Using a United States sample of 529 investments from fiscal year 2018, we found a significant association between the gender of investor and the gender of the investee’s CEO. These findings suggest that homophily may be a key social mechanism through which gender can impede or promote investment decisions.

Keywords: Entrepreneurship, Investments, funding, gender