Understanding Gender Bias in Venture Capital

'Why can’t women raise money? It’s not because they don’t perform: statistics suggest women are actually better at running businesses. Research by entrepreneurship group The Kauffman Foundation found that female-led tech teams generated a 35 per cent higher return on investment than all-male teams. When First Round Capital, the venture capital (VC) firm, analysed its 300 investments over ten years, it found that the female-founded firms it backed had performed 63 per cent better than its all-male businesses. One key reason for the discrepancy is that men back men. Male investors are half as likely to fund a woman as a female investor would be, according to Kauffman research. And only about 5 per cent of angel and VC investors across Europe are women. Venture capital funds need to be wary of “investor homophily”, according to Marta Zaccagnini, European manager for Village Capital. She defines this as “the tendency to invest in people who are similar to oneself”. “Investors struggle to allocate funds to women-led companies due to the lack of diversity within their own ranks,” she said. Research shows that when a female founder walks into a VC boardroom, investors quiz her about risk. When a man does the same, the questions focus on growth. “When I was pitching, I faced ‘what if?’ questions and worst-case scenarios, while male founders were asked about vision and growth,” said Janthana Kaenprakhamroy, whose insurance firm for the self-employed, Tapoly, is now valued at £10 million. “This shifts the discussion toward the positive and made it more likely for them to secure funding.” Lucy Tobin The Sunday Times https://lnkd.in/eexTcyKv #FundFemaleFounders

We often talk about the gender pay gap, but what about the investment gap? According to a powerful study by BCG and MassChallenge: - Startups founded or co-founded by women receive less than half the average funding of male-led startups — $935K vs. $2.1M. - But here’s the kicker: they generate more revenue. For every dollar invested, women-led startups generated 78 cents, while male-led startups generated just 31 cents. Let that sink in. Less capital. More return. So why the gap? The report highlights a few stark realities: Women face more skepticism in pitches, especially around technical credibility. Male founders are more likely to oversell, while women tend to pitch with caution. Most VCs are men — and may not relate to or recognize the market value in female-focused products or services. But here’s the opportunity: Women-founded companies are not just equal — they are statistically a better bet. It’s time for: ✅ Investors to rethink their filters ✅ Accelerators to actively support women founders ✅ Women entrepreneurs to pitch bigger, bolder — and know their value This isn’t about charity. It’s about untapped ROI. Let’s change the narrative — with data, action, and conviction. Read the full BCG report if you haven’t already. It’s an eye-opener: Why Women-Owned Startups Are a Better Bet #Startups #Entrepreneurship #AngelInvesting

Millions of voters in the United States are casting ballots today in support of women’s rights. But in the world of venture capital, the discrimination against women remains far from resolved. Take this for a crazy example: 75% of femtech companies are founded by women, yet they were able to raise, on average, 23% less capital than femtech companies founded by men. Think about that. A recent study exposes another uncomfortable truth: you can say "penis" at a VC pitch, but "vagina" is basically taboo. Female founders are "advised" to use a more "neutral" tone if they hope to secure funding, an absurd expectation in a supposedly progressive industry. This new research found that terms like “women’s rights,” “empowerment,” and “gender gap”—and God forbid, any mention of female anatomy—tend to undermine credibility for female founders in pitches, suggesting emotional or ideological motives, and fall under the “yuck factor”. Consider this: 98% of all venture capital dollars go to male-founded startups. And yet, the data speaks volumes. Female entrepreneurs generate more than double the revenue per dollar invested compared to male founders, and they tend to exit a year earlier on average. On the VC side, firms that increased the proportion of female partners by just 10% saw an average 1.5% increase in fund returns and gained 9.7% more profitable assets. The numbers don’t lie—the industry’s gender bias is not only unfounded but also costly to LPs. For me, the pressing question remains: In this gender-biased world, what future awaits my daughters?

Investors are always looking for the next big opportunity. And in this 𝐖𝐨𝐦𝐞𝐧'𝐬 𝐇𝐢𝐬𝐭𝐨𝐫𝐲 𝐌𝐨𝐧𝐭𝐡, one can see that an opportunity that continues to be underfunded is investing in female founders. Despite receiving less funding, women-led startups consistently outperform their male counterparts—a trend supported by compelling data. The numbers speak for themselves: Female-led startups consistently outperform their male-led counterparts, yet they receive a fraction of the funding. Investors should be asking—why are they leaving money on the table? Research by Boston Consulting Group (BCG) found that businesses founded by women generate more than twice the revenue per dollar invested than those founded by men. Despite receiving only half the average funding, female-led companies deliver higher ROI—a compelling case for backing women entrepreneurs. Women founders build businesses that: - Generate higher revenues - Create more jobs (US women-owned firms contribute nearly $3 trillion to the economy) - Dream bigger and execute better (Forbes) Yet, 98% of venture capital funding still goes to men, even though women own nearly one-third of businesses in the U.S. and Europe. And in Africa? They own a whopping 58% of the SMEs. So can this imbalance be due to performance or to something else? Like bias? Studies show that male founders tend to be overconfident in their abilities, while female founders exhibit greater humility. But when women do take the leap, they outperform their male counterparts across multiple dimensions, including leadership effectiveness, decision-making, and financial performance. - Women-led businesses have lower credit risk and default rates (ANR, the French National Research Agency) - Women executives improve company performance and boost productivity by 10% (World Economic Forum) - Women entrepreneurs tend to under-promise and over-deliver, reducing investor risk The reluctance to fund women isn’t just a social issue—it’s bad business. If the gender gap in entrepreneurship were closed, it could boost the global economy by up to $5 trillion. It's time for venture capital to stop chasing hype and start prioritizing high-return, high-impact investments. The data is clear: investing in women isn't charity—it's just smart business. #VentureCapital #WomenEntrepreneurs #Investment #SmartInvesting

The nature of gender bias today is that you usually can’t prove it in any one particular instance. There are definitely provable instances where someone says out loud that they don’t think a woman should be able to do or have this or that. For example, 17% of people polled by YouGov in October 2024 agree with the statement “Women should take care of running their homes and leave running the country up to men,” which is nearly 1 in 5 people. Because we’ve made some progress in equality for women, such overt statements are less common now, especially to women’s faces. But in so many instances when a woman loses out—in startups, in corporate, in politics—you can’t “prove” that bias against a woman, because she is a woman, was the cause for her to be passed over, mistreated, misjudged, or denied. To definitively prove it, you would have to have an exact counterfactual example, where all other factors are exactly the same, but the woman was a man. And that almost never exists, so there is always something else to point to as a factor. “The total addressable market of her startup isn’t big enough,” “Some of her colleagues find her abrasive,” “Her policy ideas were vague,” “We didn’t know much about her.” Yet when you look back at women’s results and lack of progress in the aggregate, the inequality smacks you in the face. In a world where “equal” would be 50%, and women have graduated from college at greater than 50% for decades, venture funding to women has been at 2% for the last 15 years. Women in CEO, management, and law firm partnership roles remain stubbornly low. Zero female presidents out of 47, though both parties have had serious contenders. Surely in *some* of the individual instances when women lost out, an unspoken bias against her affected the outcome. Women tend to suspect it when it happens to them. They see it in the doubt expressed about what they are saying; in the way their statement gets ignored in one moment but repeated by their male colleague in the next moment and praised; in the comparison of her tiniest of flaws with her male competitor’s cornucopia of faults easily forgiven. It is almost never helpful for a woman to point out suspected bias in that instant, and in many cases it is actively detrimental. “It wasn’t sexism, it was all these other things!” a chorus of men and women will angrily leap up to say. Someone will probably say exactly that about some specific instance they think I am talking about in the comments to this post (doesn’t have to be you). Pointing out suspected bias creates resentment and backlash, which makes many women just bear it quietly. Like I said, you can almost never prove anti-woman bias in a particular instance.  But you also can’t prove it *wasn’t* some conscious or subconscious, deeply ingrained way of seeing women as less capable and competent than men that caused a woman to lose out on that one investment or deal or promotion or election. ....Continued in article.

Why Female Founders Face an Uphill Battle for VC New research reveals a stark reality: women entrepreneurs face significant hurdles in securing venture capital funding, even when their track record is comparable to their male counterparts. A study co-authored by Yale SOM's Heather Tookes, Camille Hebert of the University of Toronto, and Emmanuel A. Yimfor of Columbia delves into this disparity, uncovering a troubling trend. While women represent just 16% of first-time VC-backed entrepreneurs, this number plummets to just 4% for those launching three or more ventures. The research employs a unique "twin study" approach, comparing male and female co-founders who launched the same initial startup. This eliminates any discrepancies attributed to the nature or success of the business itself. Key Findings: *Past Failures Cast a Long Shadow: Investors who experience a negative outcome with a woman-led startup are less likely to invest in other women-led ventures in the future. However, positive experiences don't seem to have the same impact; investors aren't more likely to fund women after a success. *Demand-Side Factors: Women are slightly less likely to pursue subsequent startups after a failure. However, even among those who do, they face a significant disadvantage in securing funding. *Supply-Side Bias: The study suggests that both conscious and unconscious biases among investors contribute to the funding gap. The Cost of Missed Opportunities This bias against women founders has far-reaching consequences. Years of data demonstrate a strong correlation between multiple entrepreneurial attempts and eventual success. By overlooking experienced women entrepreneurs, investors are potentially missing out on lucrative opportunities. This research underscores the urgent need to address gender bias in venture capital. By recognizing and overcoming these biases, investors can unlock the untapped potential of women-led businesses and foster a more equitable and prosperous entrepreneurial ecosystem. Read the full article using the link in the comments. #venturecapital #womenentrepreneurs #genderbias #fundinggap #innovation

A meager 2% of VC capital is invested in female-founded companies.  
Many people I know are working hard to highlight the funding gap between male and female-led companies, exploring the root causes, and proposing actionable solutions, including my colleagues, Teresa Wells, CFA Kate Nevin Lenore Champagne Beirne Research shows: 🚩Female-founded companies command only 7% of VC deal counts 🚩Teams with both male and female co-founders receive just 14.2% 🚩Only 2% of VC dollars were invested in female founded companies  🚩Women received just 11.4% of the total Small Business 504 Loans Yet: Rogue Women’s Fund Stats (as of 2020): Women led companies have 63% higher returns over 10 years period and invest up to 90% back to community and family. The Root Causes Identified: ➡️ Women are underrepresented in VC decision-making roles (just 11% of VC partners are women) ➡️ Childcare is unaffordable – 46% of women left jobs in 2021 for this reason ➡️ Women with higher VC positions in at male dominated firms protect their status by backing male biases ➡️ Gender stereotype and display of more feminine behavior (practicality) during pitches is viewed as lacking vision, while overinflated pitches and numbers are rewarded. Harvard Business School 2017 Pitch Study ➡️ Antiquated small business lending diligence biased against women. United States Senate Small Business & Entrepreneurship Committee 
 Proposed Strategies for Change:  ✅Raise awareness of the statistics above - go see the Show Her The Money documentary! ✅Get more women into VC investor roles  ✅Change the way diligence is done to address biases ✅ Create different fund structures that accommodate venture, private equity and debt ✅Promote networking opportunities through organizations like WOMEN IN TECH®- Global Movement @womenfundwomen ✅Help more women pursue careers in STEM and higher education 
Shoutout and thank you to the amazing women and their male allies who are doing this work and believe we can invest in the female operators to increase our global economy. #womeninbusiness #diversityinvc #venturecapital #privateequity #smb

Have you ever felt like you're playing a different game than your male counterparts in the business world? I recently came across a Harvard Business Review (it's a little older, but still relevant) article that shook me to my core. It revealed that venture capitalists ask male and female entrepreneurs dramatically different questions - and it's costing women millions in funding. The study found that VCs tend to ask men about potential gains, while women face questions about potential losses. This subtle bias led to male-led startups raising five times more funding than female-led ones. FIVE TIMES! As a female founder, this hit close to home. How many times have we been on the defensive, justifying our ideas instead of showcasing their potential? But here's the empowering part: We can change the narrative. The study showed that entrepreneurs who reframed prevention-oriented questions with promotion-oriented answers raised significantly more funds. We have the power to steer the conversation towards our vision and growth potential. This isn't about changing who we are. It's about understanding the game and playing it smartly. It's about recognizing these subtle biases and not letting them define our worth or our businesses. So, fellow female founders and supporters, let's arm ourselves with this knowledge.  Let's practice reframing those tough questions.  Let's confidently showcase the potential of our ideas, not just their safety. Remember, we're not just building businesses.  We're changing the landscape for every woman who comes after us. What's your experience with pitching to investors?  Have you noticed a difference in how you're questioned compared to male counterparts? Share your stories below - let's learn from each other and lift each other up. These ladies are such supporters of female founders, and I love what they do! If you aren't following them, please do! Jennie Blumenthal Cindy Gallop Erin Gallagher Kinga Vajda Ellinor Otter #FemaleFounders #WomenInBusiness #VCFunding https://lnkd.in/eUfWcBVE

None of this surprises me. But seeing the numbers still hits hard. 📊 30% of VCs think women’s participation on founding teams is overrated 📊 15% think women are bad entrepreneurs 📊 12% admit they won’t invest in women-led ventures (at all!) This is from a new study that used a randomized response method to get honest answers from 361 venture capitalists—because when you take away the social pressure to “say the right thing,” this is what they really think. As a 6x founder and investor, I’ve lived this bias and seen it up close for more than two decades. You pitch, they smile, they nod… but they’ve already decided you’re not “venture-backable” because you don’t fit their mental model of what a founder looks like. This isn’t about one bad actor. It’s a systemic mindset problem—and it’s costing all of us. Fewer bold ideas get funded. Entire markets go unserved. Talent gets overlooked. Economic growth stalls. It’s time to stop pretending this bias doesn’t exist. A lot in "startup land" is designed for the well-connected and elite few. That’s why we built something new at Builders + Backers 🔗 Full study: https://lnkd.in/epJSQ4kh 📲 Swipe the carousel for the ugly truths #VC #Startups #GenderBias #WomenEntrepreneurs #FundingGap #Entrepreneurship #DoBetter

🌶 🌶 🌶 Spicy take alert:🌶 🌶 🌶 There is no way for me to write this post without it coming across as sour grapes, but hell with it, I promised myself earlier this year that I was going to call out inequity when I see it and I saw it. While there were very few to no manels at a conference I was at earlier this month (YAY, progress!), the pitch competition finalists were comprised of all male founders. To be clear, this is NOT about the quality of their ideas, businesses, and so on, this is about how we are consistently under-valuing women-founded companies. All the companies who were chosen to pitch are wonderful startups. They are building something that they are proud of and should be spotlighted in the industry. But, here’s the reality from a women-founder point of view: We are undervalued, I did the homework 3 years ago and very little has changed. You see, I was asked to speak at another conference a few years ago on the topic of women in HRTech. At this talk, that was poorly attended, I had incredible founders and practitioners on stage with me and I shared the following data points from 2021. An HSBC survey of 1,200 entrepreneurs, mostly women, from around the world, found that a third reported gender bias when trying to raise capital. It was worse in the West, where 46% of American entrepreneurs said they experienced gender bias and 54% of U.K. women reported bias. Women said that investors asked them more invasive questions centered around their personal lives, rather than about their business idea. HSBC reported that overall, women typically secured less money than their male counterparts. Just 25% of women business owners seek business financing. (Forbes, 2021) 2% or less of US venture capital goes to all-women founding teams (PitchBook, 2023) Of the 13 HRTech unicorns, 1 has a woman CEO. (2021) And here we are 3 years later, and it’s basically second verse same as the first. Women are under-represented in an industry where women are predominantly buyers. I keep asking, over and over again, year after year, what gives? When will this change? When will we see more representation on the stage in pitch competitions or conferences in general? 🤦♀️ Next time you see me, look for the tiny bruise in the middle of my forehead. It’s there. I keep banging my head against this same wall for more than 15 years. We can, we must do better.