Funding Her Future: How Female Investors Drive Early Growth and Success in Female-Founded Startups

Funding Her Future: How Female Investors Drive Early Growth and Success in Female-Founded Startups (with Valerio Pelucco)

SPEAKER:

Jiongni Mao (University of St. Gallen) 

ABSTRACT:

Recent research suggests that female entrepreneurs face challenges when accessing financial capital and tend to generate lower profits than male-led firms. Female support for other women is often proposed as a solution to closing the gender gap in various fields, but we have mixed evidence about this same gender support. The pairing of female investors and female entrepreneurs appears to increase the likelihood of female-founded startups obtaining initial funding, but it is also shown to hurt their funding possibilities and performance in the long run. Expanding beyond studies focused on investor-entrepreneur dyad analysis, we build on this research stream to examine how increased representation of female venture capitalists in industry-level investment deals influences the growth and success of female-founded startups. Our analysis is based on a sample of 82,737 U.S. startups from 2000 to 2022. The results indicate that female-founded startups secure initial funding more quickly, experience improved success rates, and achieve higher annual revenues when a larger share of deals in their industry is led by female VC partners. Furthermore, we show that a greater industry-level presence of female investors can facilitate the growth of female-founded startups by improving their access to financing.