Study: Women Angel Investors Are More Cautious Does gender affect how investment decisions are made?

As angel funds--groups of angels pooling their money and making joint investments in a variety of businesses--grow in popularity, two researchers have taken a look at whether gender diversity matters in their investing strategies. The answer, they found, is yes. In their paper, "The Effect of Gender Diversity on Angel Group Investment," Jeffrey E. Sohl, director of the Center for Venture Research at the University of New Hampshire's Whittemore School of Business and Economics in Durham, N.H., and John R. Becker-Blease, assistant professor of finance at Oregon State University in Corvallis, Ore., found that women investors are more cautious than men in their investment decisions.

"Women tended to be a little less confident as angel investors than men," Sohl says. As a result, the number of investments made by women angels tends to be lower than those made by men. However, in teams where women comprised more than 10 percent of the investment team, investment levels by women also rose, according to the duo's research.

Sohl is quick to point out that investment levels may be affected by factors like available investable resources, quality of deal flow and individual risk tolerance. In addition, he says that the findings must not be construed to mean that women always invest at a more conservative pace. As the paper notes, "although our data suggests that an entrepreneur is least likely to receive funding from a gender diverse group when women represent a small minority, we cannot speak to the other potential benefits such groups might provide."