Research ArticleSOCIAL SCIENCES

Evidence that investors penalize female founders for lack of industry fit

See allHide authors and affiliations

Science Advances  25 Nov 2020:
Vol. 6, no. 48, eabd7664
DOI: 10.1126/sciadv.abd7664

Abstract

Are female founding CEOs penalized when raising funds for their ventures based on industry served? Across an observational study conducted on ventures seeking funding (N = 392) and an experimental study conducted on investors allocating venture funding (N = 130), we find evidence for a “lack of fit” effect: Female-led ventures catering to male-dominated industries receive significantly less funding at significantly lower valuations than female-led ventures catering to female-dominated industries. In contrast, male-led ventures attain similar funding and valuation outcomes regardless of the gender dominance of the industries to which they cater. We confirm that this is because investors perceive lower degrees of fit between founding CEO and venture for female-led ventures catering to male- as opposed to female-dominated industries (with no perceived fit differences for male-led ventures across industries). Degree of investor sophistication emerges as a potential attenuating factor, appearing to help reduce gender bias from perceived lack of fit.

https://creativecommons.org/licenses/by-nc/4.0/

This is an open-access article distributed under the terms of the Creative Commons Attribution-NonCommercial license, which permits use, distribution, and reproduction in any medium, so long as the resultant use is not for commercial advantage and provided the original work is properly cited.

View Full Text

Stay Connected to Science Advances