Investors prefer entrepreneurial ventures pitched by attractive men

Investors preferred pitches presented by male entrepreneurs compared to pitches made by female entrepreneurs, even when the content of the pitch is the same. Attractive men were particularly persuasive, whereas physical attractiveness did not matter among female entrepreneurs.

FindingsMethodology

Entrepreneurship is considered a central path to job creation, economic growth and prosperity; entrepreneurial start-up ventures contribute almost 20% of new job creation annually in the United States. In the earliest stages of start-up business creation, the matching of entrepreneurial ventures to investors is critically important. The entrepreneur’s business proposition and previous experience have been regarded as important factors for investment decisions.

However, a strong gender imbalance has persisted in entrepreneurship, and in the vast majority of countries, there are significantly more male entrepreneurs than female entrepreneurs. In the United States, men engage in entrepreneurial activity at almost twice the rate of women. The gender gap has been attributed to a mismatch between personality attributes that are typically associated with women (e.g. emotionalism) and personality attributes that are typically associated with successful entrepreneurs (e.g. leadership, propensity to take risks, etc.). This perceived lack of fit makes women less likely to pursue and to be selected for entrepreneurial ventures.

Although the gender imbalance is undesirable and challenging for female entrepreneurs, it remains unclear whether the gender imbalance is due to unconscious decision making on the part of the investor. In this study, the authors conduct one field study (Study 1) and two experimental studies (Studies 2 & 3) to examine whether investors’ decisions are influenced by other criteria, such as the entrepreneur’s gender and physical attractiveness. In Study 1, they explore how entrepreneur gender & physical attractiveness influence investor funding decisions by using real entrepreneurial pitches in a field setting (pitch competitions). In Study 2, the authors test the effect of gender on entrepreneurial persuasiveness in a controlled experiment. In Study 3, they test the effects of both gender and physical attractiveness on entrepreneurial persuasiveness.

Findings

Investors preferred pitches presented by male entrepreneurs compared to pitches made by female entrepreneurs, even when the content of the pitch was the exact same. Attractive men were evaluated as particularly persuasive, whereas physical attractiveness did not matter among female entrepreneurs.

  • In the field setting (Study 1), male entrepreneurs were 60% more likely to be awarded funding for their pitches than female entrepreneurs.
  • In the field setting (Study 1), high physical attractiveness led to a 36% increase in male entrepreneurs’ likelihood of receiving funding, as compared to low physical attractiveness; however high physical attractiveness did not significantly influence female entrepreneurs’ likelihood of receiving funding
  • In the first experimental study (Study 2), when men and women presented identical pitches, 68.33% of participants chose to fund the ventures pitched by a male voice, while only 31.67% of participants chose to fund the ventures pitched by a female voice.
  • In the second experimental study (Study 3), results revealed similar findings: participants reported that they were significantly more likely to invest when the pitch was narrated by a male voice (average score of 4.90 out of 7) than when the same pitch was narrated by a female voice (average score of 4.25 out of 7).
  • Moreover, participants rated male-narrated pitches higher than female-narrated pitches on the following qualities:
    • Persuasiveness (average score of 5.04  for male voices, and 4.45 score for female voices)
    • Fact based (average score of 5.51 for male voices, and 4.81 score for female voices),
    • Logic (average score of  5.87 for male voices, and 5.3 score for female voices)
  • When high or low physical attractiveness photos of the entrepreneurs were added, participants reported being significantly more likely to invest in high-attractiveness male pitches (average score 5.21) than low-attractiveness male pitches (average score of 4.59).
  • However, there was no significant difference in the likelihood to invest in high-attractiveness female entrepreneur (average score of 4.14) and low-attractiveness female entrepreneur (average score of 4.35); neither participants’ age nor participant gender significantly impacted their investment decisions.

In short, across a field setting and two experiments, there was a profound and consistent gender gap in entrepreneur persuasiveness. Investors were found to make funding decisions based on the gender and physical attractiveness of the entrepreneurs themselves.

Methodology

Study 1: The authors randomly selected 90 pitches from three entrepreneurial pitch competitions, holding the proportion of successful and unsuccessful pitches constant across each of the 3 pitch competitions (10 successful pitches and 20 unsuccessful pitches from each competition). The pitches were between 5 and 8 min in duration and were judged by a live panel of angel investors. The authors defined a successful pitch as one that was awarded a funding prize in one of the competitions. The prizewinners were awarded start-up capital as an infusion of cash to help develop their business ideas. The competitions were quite competitive: entrepreneurs had a 3% chance of winning a funding prize. Of the 90 pitches in the randomly drawn sample, 70 were given by male entrepreneurs (77.78%) and 20 were given by female entrepreneurs (22.22%) across a range of business sectors. After the pitch competitions, the authors recruited a separate panel of 60 experienced angel investors to code the pitch videos across several measures, including physical attractiveness.

Study 2: The authors recruited a nationally representative sample of 521 Americans (46.64% female) over Amazon’s Mechanical Turk to participate in a study. Participants watched two pitch videos, which featured real start-up ventures whose pitches had been developed for a university-based business plan competition. The authors chose two companies from the same business sector (veterinary technology) to control for industry-specific variation in investment preferences. They recruited a separate panel of 12 expert investors to rate the probability of success of the two ventures on a scale measure of success likelihood (1 = extremely unlikely to be successful, 7 = extremely likely to be successful). The expert investors had more than 8 years of venture capital experience on average. On average, the panel of investors rated venture A’s likelihood of success as 4.40/7 and venture B’s likelihood of success as 3.75/7. Study participants earned US $1 for each rating point. Therefore, if they chose venture A, they earned US $4.40, and if they chose venture B, they earned US $3.75. Of the 521 participants, 298 participants (57.20%) chose to fund venture A, and 223 participants (42.80%) chose to fund venture B.

The pitch videos showed images and diagrams related to ventures A and B, but they did not show the entrepreneurs themselves. Participants heard the entrepreneur’s voice-over narration while they watched each video. This video pitch format allowed the authors to dub in a male voice and a female voice, holding the narration script constant. Every participant watched both pitch videos, one narrated by a male voice and the other narrated by a female voice. The authors randomly assigned entrepreneur gender and video presentation order in a 2 (entrepreneur gender: venture A male/venture B female vs. venture A female/venture B male) × 2 (presentation order: venture A first vs. venture B first) between-subjects experimental design. After watching the videos, participants chose which company to fund, venture A or B, and were paid based on their investment choice.

Study 3: The authors recruited 194 participants (57.73% female) to a behavioral laboratory to participate in a study in exchange for US $5. They used the same design as in Study 2 with two important differences. First, for parsimony in experimental design and sufficient experimental power, participants watched only one pitch video. This meant that instead of using investment choice as the main dependent variable, participants rated how likely they were to invest in the venture on a scale measure (1 = very unlikely to invest, 7 = very likely to invest). The authors also asked participants to report the extent to which they thought “the pitch was persuasive,” “the pitch was fact-based,” and “the pitch was logical” on 1–7 scales. Second, in addition to narrator gender, the authors also manipulated the physical attractiveness of the entrepreneur by presenting a gender-matched high- or low-attractiveness photo along with the video. This produced a 2 (entrepreneur gender: male vs. female) × 2 (entrepreneur physical attractiveness: high vs. low) between-subjects experimental design.