Female check-writers alone aren’t enough to close the female fundraising gap, data shows

Feb 22, 2023

In this engaging discussion, Kaisa Snellman, an economic sociologist and academic director of the INSEAD Gender Initiative, explores the nuances of female entrepreneurship and fundraising. She reveals that female-led startups relying solely on female investors are twice as likely to struggle in securing a second round of funding. Kaisa delves into gender dynamics, highlighting the biases female founders face and the unintended consequences of diversity quotas. The conversation is a thought-provoking examination of how to truly support women in business.

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INSIGHT

Gendered Funding Bias

Female founders raising capital exclusively from female VCs face bias similar to affirmative action.
They may be perceived as less competent, even with strong credentials, mirroring biases in other areas.

INSIGHT

Funding Gap for Female Founders

Women-led startups with exclusively female VCs are twice as unlikely to get second-round funding.
This holds regardless of round size, industry, location, or investor prestige, suggesting a systemic issue.

ANECDOTE

Impact on Male-Founded Firms

Male-founded firms aren't negatively impacted by having a female VC in their first funding round.
This suggests the issue isn't the VC's gender but the combination of a female founder and exclusively female investors.

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Hello, and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This is our Wednesday show, where we niche down to a single person, think about their work and unpack the rest. This week, Natasha interviewed Kaisa Snellman, an economic sociologist and an associate Professor of Organizational Behavior and Academic Director of the INSEAD Gender Initiative. We know, we know, it's a flex.

We’re going to talk about: Kaisa’s recent Harvard Business Review piece with Isabelle Solal: For Female Founders, Fundraising Only from Female VCs Comes at a Cost. The duo's research asserts that women-led startups whose first round was raised exclusively from female VCs were 2x less likely to raise a second round regardless of initial funding round size, industry, geographic location, or prestige of the investor.

Listen to the whole conversation before you jump to conclusions, but let's just say that this conversation really got into the numbers and nuance behind the headlines.

The data is both revolutionary, and provocative.

Here's what we got into:

How people see female founders who just raise from female investors, and the pitching bias that continues to exist in the world
Why the answer to imbalances is more complicated than getting female check-writers to the table
And finally, we talk about how diversity quotas and funds may have unintended consequences that are worth thinking a bit more about.

Equity will be back on Friday with a familiar voice you may be missing, but you can keep up with us in the meantime on Twitter @EquityPod.

For episode transcripts and more, head to Equity's Simplecast website.

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Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.

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