New Research: Male Founders 40% More Likely to Be Funded by VCs

7091677251_e9ff0783a9_c

If a woman and man gave the exact same pitch, VCs would be equally likely to fund them, right? Not by a long shot, says a recent study.

By Betsy Mikel (Contributing Writer, Women 2.0)

Almost all VC funding goes to men. And that isn’t an exaggeration. Stanford’s Clayman Institute for Gender Research reports that women-led businesses only get 4.2% of venture capitalist funding. Other reports claim that female entrepreneurs receive a whopping 7% of the funding.

Sure, fewer women-owned businesses appeal to venture capitalists. As Forbes points out “men often start businesses with the intention of achieving some semblance of world domination while women are often starting ‘side hustles’ and one-woman operations.” And another big issue is that women don’t like to ask for money. Susan Wilson’s quick experiment and resulting post on CNN money even went so far as to conclude that women are afraid of money.

But that still leaves plenty of female founders pitching for VC investments. What if a male entrepreneur and a female entrepreneur had the exact same pitch? Would venture capitalists be more likely to fund one over the other?

It turns out that Fiona Murray and her colleagues at Harvard Business School and The Wharton School have some insight into the matter. She explains their study:

I recently conducted a study that involved video pitches for new companies that used slides, an identical script, and a voice-over from either a male or female “founder.” It turned out that companies pitched by men were about 40 percent more likely to receive funding than those led by women. In a follow-up experiment, we found that evaluators particularly favor pitches from attractive men, and that attractive women do worse than unattractive men and women.

Murray concludes that VCs evaluate opportunities on more than market size, competitive advantage and customer needs. Their social, cultural and emotional biases can also creep in, which often work against women. In  other words, if she’s not interested in rehashing yesterday’s football game fumbles, that could be bad news for funding for her company, Murray explains:

“I ask myself: Is this a person I want to have breakfast, lunch, and dinner with,” one man told the class. “Are they the first person I think about when I get up in the morning?” asked another. This approach struck me more like a search for a soul mate than for a financial investment.

Want to increase your chances of receiving VC funding? Check out Fiona Murray’s complete post for four tips on how to pitch to and connect with investors.

What can be done to counter VC’s unconscious biases?

BMikelPhotoSquareBetsy Mikel is a freelance copywriter and content strategist who helps brands, businesses and entrepreneurs tell their stories. A journalist at heart, her curiosity drives her to find something new to learn every single day. Follow her on Twitter at @betsym.

Photo credit: The DEMO Conference via Flickr