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Journal articles (2022), Organization Science, In press

Does Investor Gender Matter for the Success of Female Entrepreneurs? Gender Homophily and the Stigma of Incompetence in Entrepreneurial Finance

SNELLMAN Kaisa E., SOLAL Isabelle

We propose that homophily aggravates negative gender bias in evaluation. Focusing on the context of entrepreneurship, we theorize that future investors will discount a female entrepreneur’s competence as the key factor in an early-stage investment decision, when the investment comes from a female investor. Consequently, femalebacked female entrepreneurs may struggle to raise additional funds from newinvestors. In a field study of venture-backed startups, we find that firmswithfemalefounderswho received funding from female rather than male VCs are two times less likely to raise additional financing. We find no equivalent investor gender effect for male-founded firms. In an experimental study, we findthat pitchesbyfemale-backedfemale entrepreneurs receive lower evaluations compared with all otherpitches, and that this is driven by perceptions of entrepreneur competence. Our findings suggest that well-intentioned calls for women to invest in women not only place an undue burden on female investors, but may also underminethelong-term success of female entrepreneurs. Link to the article

SNELLMAN, K.E. and SOLAL, I. (2022). Does Investor Gender Matter for the Success of Female Entrepreneurs? Gender Homophily and the Stigma of Incompetence in Entrepreneurial Finance. Organization Science, In press.

Keywords : #entrepreneurship, #gender-inequality, #homophily