The paradox of the female entrepreneur.

Startups with at least one female on their founding teams are more successful, yet female entrepreneurs receive only a fraction of the funding of their male counterparts. Why is this, and what can be done about it?

In one study, researchers found that companies with at least one female founder perform 63% better than investments with all-male founding teams (FirstRound, 2015), yet female entrepreneurs experience more difficulties accessing funding and receive smaller amounts of funding (e.g., Brana, 2013; Burk, van stel, Hartog, & Ichou, 2014; Coleman & Kariv, 2014). And in 2016, venture capitalists invested $58.2 billion in entrepreneurial ventures with all-male founders. In comparison, ventures with all-female founders received only $1.46 billion (Zarya, 2017).

What explains this disparity? Research into the psychology of entrepreneurs and investors suggests a few explanations.

Firstly, women entrepreneurs are evaluated based on a different set of standards compared to their male counterparts (Malmstrom, Johansson, & Wincent, 2017a). Women even get asked different questions by investors. This likely occurs because people (both men and women) perceive entrepreneurs as having predominantly masculine attributes (Gupta, Turban, Wasti, & Sikdar, 2009). Therefore, women might be perceived as being less entrepreneurial than men.

A group of researchers silently observed closed-room governmental venture capital decision-making meetings they had about evaluations of 125 entrepreneurial ventures and their founders (Malmstrom et al., 2017a). The researchers discovered that government venture capitalists talked about the potential of a male entrepreneur differently than female entrepreneurs. For example, a male entrepreneur might be described as “young and promising” while a female would be described as “young, but experienced.” These disparate attributions also led to disproportionate funding. On average, women received only 25% of what they applied for compared to 52% of requested amount for the males.

Although this research seems to present a dismal view of funding opportunities for women, the research study actually led to positive change including development of a new strategy of dispersing funds and new regulations (Malmstrom, Johansson, & Wincent, 2017b). Likewise, strategies to minimise the bias of investors – which we discussed in a previous article – can not only improve the quality of the decisions that investors make but also improve opportunities for female entrepreneurs.

By Ben Hawkes and Dr. Nikki Blacksmith


Brana, S. (2013). Microcredit: An answer to the gender problem in funding? Small Business Economics, 40, 87–100.

Burke, A., van Stel, A., Hartog, C., & Ichou, A. (2014). What determines the level of informal venture finance investment? Market clearing forces and gender effects. Small Business Economics, 42, 467–484.

Coleman, S. & Kariv, D. (2014). Deconstructing’ entrepreneurial self-efficacy: A gendered perspective on the impact of ESE and community entrepreneurial culture on the financial strategies and performance of new firms. Venture Capital, 16, 157–181.

First Round (2015) 10 Year Project. First Round. Retrieved from: http://10years.firstround.com/

Gupta, V. K., Turban, D. B., Wasti, S. A., & Sikdar, A. (2009). The role of gender in stereotypes in perceptions of entrepreneurs and intentions to become an entrepreneur. Entrepreneurship Theory and Practice, 33, 397-417.

Kanze, D., Huang, L., Conley, M.A., & Higgins, T. T. (2017). We ask men to win & women not to lose: Closing the gender gap in startup funding. Academy of Management Journal. doi: 10.5465/amj.2016.1215

Malmstrom, M., Johansson, J., & Wincent, J. (2017). Gender stereotypes and venture support decisions: How governmental venture capitalists socially construct entrepreneurs’ potential. Entrepreneurship Theory and Practice. doi: 10.1111/etap.12275

Malmstrom, M., Johansson, J., & Wincent, J. (2017). We recorded VCs’ conversations and analyzed how differently they talk about female entrepreneurs. Harvard Business Review

Zarya, V. (2017). Venture capital’s funding gender gap is actually getting worse. Fortune. Retrieved from: http://fortune.com/2017/03/13/female-founders-venture-capital/

About Blackhawke

Using unique psychological assessments and predictive analytics, Blackhawke provides venture capitalists, angels and other investors with a deep understanding of the capability, resilience, motivation, strengths and weaknesses of entrepreneurs and startup management teams. See www.blackhawke.io for more information, or email info@blackhawke.io.

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