Does Gender affect the investment strategy of Private equity and Venture capital firms? Evidence from Impact investing

Abstract

This study investigates the effects of gender on impact investment strategies of private equity (PE) and venture capital (VC). Utilizing a large dataset from 2010 to 2021, we find that women-founded PE/VC firms are more likely to self-declare and adopt impact investing strategies. Women-founded PE/VC firms are more likely to engage in impact investments in numbers and amount of funds. We find partial evidence for syndicates including women-founded PE/VC firms to invest in impact industries. Further analysis reveals that the gender effects on PE/VC impact investments are more pronounced in regions with higher gender equality. Our results are robust after addressing concerns of sample selection and endogeneity. We underscore the significant effect of women founders on PE/VC investment strategies and the critical role of institutional context in shaping representation in the PE/VC industries.

Keywords: venture capital; private equity; impact investing; gender; institution

JEL Classification: G24