(This post originally appeared on The Guardian)
Do female entrepreneurs face discrimination when trying to raise money from venture capitalists? Many justifiably think so. But according to a new study, that attitude may be changing – at least for investments in the very early stages.
The study, which was conducted by researchers at the University of British Columbia and Stanford University, found that when making cold investment pitches to venture capitalists, female entrepreneurs were getting more favorable responses than their male counterparts.
The researchers sent out more than 80,000 pitch emails that introduced “promising but fictitious” startups to 28,000 venture capitalists and angel investors. The pitches that came from entrepreneurs who had obviously female names received a 6% higher rate of interested replies than men.
“We were definitely surprised by the gender results,” Will Gornall, a professor at the University of British Columbia’s Sauder School of Business and one of the lead authors of the study, told MarketWatch. “We expected to find discrimination against women, based on previous the very skewed gender ratio in VC, research showing discrimination against women, and the recent string of publicized incidents of harassment.”
It’s good stuff, but let’s not get ahead of ourselves. Just because a venture capitalist or any investor is interested in a cold pitch doesn’t automatically mean that funding will come. But for many female entrepreneurs, it’s an encouraging sign that the financing environment for them could be getting better – and the numbers seem to show it.
According to a new study released by the research firm Crunchbase, female-founded companies received an “unprecedented” level of funding in 2018 – almost $40bn, an increase of over 56% from the prior year and up from only $8bn invested in 2014. It’s encouraging news, but let’s face it: men are still the ones getting most of the new startup capital raised. Some 83% of the venture funding raised globally last year still went to male-led companies, according to the same Crunchbase report.
So why the huge disparity? Many of the male investors I know categorically deny that they discriminate by gender when making their financing decisions. But the data paints a different picture. The fact is 90% of venture capitalists are still men and the MarketWatch report mentioned above cites studies that show that male-led companies were almost twice as likely to receive funding from male investors than female-led companies.
“We like to think that venture capital is driven by the power of good ideas,” philanthropist Melinda Gates wrote in ReCode back in 2017. “But by the numbers, it’s men who have the keys.” Gates says that the issue has “more to do with historical inequalities than it does with innate ability” and suggests better measurement, “bold leadership” and more efforts from the venture capitalist community to invest in female-led companies. We’ll see.
For the growing number of female startup founders who are looking for venture capital money, it all means forward progress. But there’s still a very long way to go.