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New research: investors penalize female founders who don’t “fit” male industries

New research finds that female founders of entrepreneurial ventures raise significantly more funding when catering to female-dominated industries. Effectively, this means that men are afforded credibility across a broad range of industries, while women are confined to a less lucrative subset of the labor market.

Gender inequalities persist in different forms all over the world, but across the globe, more and more women seek to employ themselves by founding entrepreneurial ventures. Through entrepreneurship, founders recognize a chance to sidestep biased hiring and promotion processes, and earn outside typical hierarchies associated with incumbent large firms.

New research, conducted in part at the House of Innovation, finds that female founding CEOs have difficulty raising funds to grow their early-stage ventures compared to male founding CEOs. An experiment with accredited and non-accredited investors shows that female founders raise significantly more funding when catering to female-dominated industries. They are severely penalized in terms of funding and valuations when they trespass into a typically male industry.

Male entrepreneurs are afforded credibility across a broad range of industries while women are confined to a less lucrative subset of the labor market. An interesting coda to these experiments is the observation that this effect was attenuated among experienced investors, who appear to make more sophisticated evaluations of entrepreneurs and their ventures based on relevant merits instead of relying on heuristics and biases.

“These studies reflect stereotypes in the labor market right now, and our experiments pinpoint the phenomenon that other researches have observed. Some people might be surprised that both male and female investors exhibit this bias, but we have seen this same pattern among angel investors and VCs before regardless of their gender. One important contribution is that we dispel the notion that the gender financing gap in entrepreneurship is due to women targeting 'female friendly' industries which aren’t always associated with high capital growth. We show how investors react to women in typically male-dominated industries, and effectively dismantle that argument,” says Mark A. Conley. 

These studies join a body of entrepreneurship research on investor decision-making and what investors focus on when evaluating viable ventures. Previous research had found that a male-typed product — craft beer — was evaluated less favorably when described as produced by a woman rather than by a man. This finding precipitated the present experiments and exemplifies an insidious phenomenon within entrepreneurship: women and their work are penalized when entering male-dominated work environments.

Ultimately, these new studies highlight persistent occupational segregation by gender and encourage investors to educate themselves in order to promote cross-sector representation for all entrepreneurs.


Dana Kanze1, Mark A. Conley2, Tyler G. Okimoto3, Damon J. Phillips4, Jennifer Merluzzi5

1 London Business School, London, UK.

2 House of Innovation, Stockholm School of Economics, Stockholm, Sweden.

3 The University of Queensland, Brisbane, Australia.

4 Columbia Business School, New York, NY, USA.

5 George Washington University, Washington, DC, USA.

House of Innovation Gender Inequality Labor Entrepreneurship Equality Finance Article News Research