Gender, looks hold sway in venture capital funding

If you are planning to start a company and are looking for early-stage funding, this is for you. You may have a great business model, relevant experience and an Ivy League pedigree, but researchers found that you may also need gender and good looks on your side as well.

A set of researchers, led by Alison Wood Brooks from the Harvard Business School and Laura Huang of Wharton School, University of Pennsylvania, found that investors prefer pitches made by male entrepreneurs, even when the content was the same. Not only that, pitches made by attractive men were seen to be more persuasive.

Let’s look at gender first. Around the world, there are more male entrepreneurs than female. Among high-growth potential ventures backed by venture capital, only 11% were led by women and women-led ventures got only 7% of venture capital funds.

The researchers conducted experiments across three investor pitch competitions in the US where entrepreneurs made pitches to a panel of angel investor judges.

In the first experiment, the judges were presented with video clips of a pitch with a voice-over narration, without disclosing the face of the entrepreneur. Although the female and male voices presented identical pitches, 68.33% of participant judges chose to fund the ventures pitched by a male voice and only 31.67% of participants chose to fund the ventures pitched by a female voice.

In the second experiment, the videos were presented along with a gender-matched high- or low-attractiveness photo. Here too, participants rated the pitches made by men on a scale of one to seven, and the attractive males were rated more persuasive and logical.

For women, even good looks did not tilt the balance in their favour, the researchers found.

The result of such unconscious biases is that, women may remain under-represented in the entrepreneurial ecosystem and even for men, opportunities may be unevenly distributed.