New Data Illuminates VC Bias Against Women Where men were 'young and promising,' women were 'young, but inexperienced.'

By Nina Zipkin


Startup database Crunchbase in April 2017 released some unsettling, if unfortunately not unexpected, data about who exactly receives venture capital money.

In 2016, $94 billion was invested in companies that had only male founders, while $10 billion went to businesses with at least one female founder. Not only that, but 17 percent of VC-funded startups are led by women, which is a number that has remained stagnant for the last five years.

And this kind of disparity doesn't only exist in the United States.

Related: Only 17 Percent of Venture-Backed Startups Are Led by Women

To investigate the role that gender stereotyping plays in these types of decisions, a trio of Swedish researchers sat in on closed-door conversations between venture capitalists to get a better understanding of how they view the pitches brought to them by male and female entrepreneurs.

In Sweden, as a basis of comparison, one third of businesses are owned and led by women, but they only receive 13 to 18 percent of government venture funding.

Throughout the course of the experiment, the researchers chronicled the decisions made about 125 companies, 99 of which were pitched by men and 26 by women.

Related: Women Won't Have Equal Numbers of Board Seats Until 2055, New Study Finds

Describing their experiment in May 2017 in the Harvard Business Review, Malin Malmstrom, Jeaneth Johansson and Joakim Wincent wrote, "Aside from a few exceptions, the financiers rhetorically produce stereotypical images of women as having qualities opposite to those considered important to being an entrepreneur, with VCs questioning their credibility, trustworthiness, experience, and knowledge."

And how did the men fare? "Financiers leaned on stereotypical beliefs about men that reinforced their entrepreneurial potential," they explained. "Male entrepreneurs were commonly described as being assertive, innovative, competent, experienced, knowledgeable, and having established networks."

So what are the phrases that the researchers identified that give voice to this financial divide?

Related: 10 Facts That Will Change How You Think About Opportunity and Entrepreneurship

Where men were "young and promising," women were "young, but inexperienced." When a man was "cautious, sensible and levelheaded," a woman was "too cautious and does not dare." When a male entrepreneur was "experienced but knowledgeable," a women entrepreneur was "experienced but worried."

Of the 125 pitches put to the VCs in the study, female entrepreneurs on average were given 25 percent of the amount of money they applied for, while men got on average 52 percent of the figure they wanted. Nearly 53 percent of their applications were rejected altogether, while that happened to only 38 percent of men.

Update, March 15, 2018

The same group of researchers built on this study in March 2018, and asked 11 venture capitalists from two Swedish government organizations about how gender stereotypes might have influenced the decisions they made about finance applications from 126 entrepreneurs.

They took four core assumptions: that women are risk-averse while men are not, that women are more cost-conscious and have a reluctance to grow big businesses, that women don't have enough resources to develop a high growth company and men do and that women's companies underperform while men's startups do not.

In assessing how both the male and female entrepreneurs fared with regard to things including earnings, turnover, number of employees, operating margins and literally how much money was in the bank, the researchers came to one solid conclusion. According to a summary of the findings from the researchers in Harvard Business Review, there were "no statistically significant differences between women and men who apply for finance. In total, none of the beliefs VCs expressed about female versus male entrepreneurs could be backed up by data related to how ventures actually performed."

Nina Zipkin

Entrepreneur Staff

Staff Writer. Covers leadership, media, technology and culture.

Nina Zipkin is a staff writer at She frequently covers leadership, media, tech, startups, culture and workplace trends.

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