Male entrepreneurs are the beneficiaries of the overwhelming majority of venture capital investments. But are their ideas really better investment opportunities for VCs than those pitched by women? Not necessarily. In a two-part study, researchers observed that venture capitalists adopt markedly different stereotypical notions of female and male entrepreneurs during their decision-making processes. These stereotypical notions, which cast men as having traits better suited to starting successful companies, don’t hold up when compared with venture performance data from annual reports. In other words, there is no statistical evidence that many myths about female entrepreneurs are true.
This study shows that women may be at a disadvantage when signaling that they are“entrepre-neurial”to venture capitalists. We demonstrate how gender-based disadvantages may arise fromrole incongruence in entrepreneurship by analyzing multi-source data from 131 venture capitalapplications, venture capitalists’cognitions, and their funding decisions. Our analysis indicatesthat women who signal an entrepreneurial attitude are more likely to elicit prevention consid-erations from venture capitalists, whereas men who signal such an attitude are more likely to elicitpromotion considerations. We alsofind that promotion considerations increase the amount offinancing, whereas prevention considerations decrease the amount offinancing. Our study in-creases knowledge about the gendered cognitions that underlie implicit bias among investors andknowledge about the effects of regulatory focus on funding outcomes by exploring the interactionbetween gender and entrepreneurial attitude.
Although often discussed, there has been limited effort to match venture capitalists’ construction of gender notions with specific facts about the entrepreneurs’ venturing activities. This study shows how stereotypical gender notions of both men and women entrepreneurs are embedded in venture capitalists’ assessments and analyses as well as explores whether or not these notions have substance based on actual performance. Drawing on interview data and statistical analysis of objective key performance information from accounting reports, we identify four myths in the evaluations of 126 venture capital applications for governmental capital that do not have any significant empirical substance. We discuss these findings’ implications for the study of myths in women's entrepreneurship
Our study uses cognitive mapping techniques to take into account how the same/opposite gender influences the cognitive evaluations of venture capitalists (VCs). Contrary to what has often been discussed in previous entrepreneurship literature, our results report women VCs evaluate women entrepreneurs more critically, and men VCs evaluate men entrepreneurs more critically. However, overall, the VCs' vaguer processing and lower rating of women's venturing compared to men's indicate a general structure of subordinating women's venturing compared to men's venturing. Ultimately, this contributes with an alternative view to explain what we see on the VC scene: women entrepreneurs are more likely to be rejected. We discuss implications of these results as well as implications for future study.