Do investors discriminate against women?

Offices dominated by men defy the tech industry’s meritocratic rhetoric, and only 7%  of venture capital money has gone to startups founded by women.

Kathryn Minshew, co-founder of the fast-growing women’s career website The Muse, told The Verge that while raising money, a close advisor once suggested they add a man to the founding team for “credibility.” Does men on team really add credibility ?

Investors prefer entrepreneurial ventures pitched by attractive men.

Researchers from Harvard, MIT, and the University of Pennsylvania, analysed the results of 5 real pitch competitions in the U.S. in which angel investors rewarded the winners with seed funding. Investment was bias toward male entrepreneurs is evident in the graph; the researchers found that men were 60% more likely to win the competition.

The surprising discovery of the research was that the attractiveness was a major bias, but only among male entrepreneurs. Even when controlling for factors like years of experience and business sector, gender explained 24% of the variation in pitch success while attractiveness explained 36% of success in the competition.

The effect of attraction was driven only by men, whereas looks had no significant impact on the women’s chances of securing funding.

 

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