Numerous studies have shown that it’s harder for women to raise money for startups than men. But a new report in the Social Science Research journal suggests there’s a way for women to up their chances of securing money and overcome some investor biases. To do so, they need to have strong technical backgrounds and stellar references.
The study, which was unearthed by The Wall Street Journal’s Yuliya Chernova, asked 114 budding male venture capitalists from Stanford University’s entrepreneurs club to evaluate the a Silicon Valley startup pitch.
The men agreed to invest 26.2% of the asked-for $US6 million when the CEO was a man with a technical background, but only 20% when it was a woman with the same technical training.
But women with a technical background had an advantage over men who didn’t have one. Men without strong tech backgrounds received only 11.4% of the funding, significantly less than the women.
Non-technical women fared the worst, snagging only 8.8%. So, with everything equal, women still lost out. The silver lining is the bias against those without a technical background is stronger than the gender bias.
References are also more important for women seeking funding than men, the study found. The subjects rated the importance of a good reference for male and female founders on a scale of one to six and rated women as 5.1 versus 4.6 for men.