Gender and venture capital decision-making: The effects
 of technical background and social capital on entrepreneurial evaluations

• Female entrepreneurs with technical backgrounds were perceived as having significantly more leadership abilities than male entrepreneurs with technical backgrounds, while female entrepreneurs with non-technical backgrounds were perceived as having significantly less leadership abilities than male entrepreneurs with non-technical backgrounds.
• Male entrepreneurs with non-technical backgrounds were evaluated as having significantly more leadership abilities than their male counterparts with a technical background, whereas female entrepreneurs with this same lack of training were perceived as having less leadership abilities compared to female entrepreneurs with technical backgrounds.
• Female entrepreneurs with non-technical backgrounds were viewed as significantly less competent than female entrepreneurs with technical backgrounds. Male entrepreneurs were viewed as similarly competent regardless of technical or non-technical background.
• Male and female entrepreneurs with non-technical backgrounds were assigned higher sociability ratings than their technical counterparts.
• Male and female entrepreneurs with technical backgrounds earned significantly more favorable endorsements for their venture than entrepreneurs with non-technical backgrounds, with a larger effect size for the female entrepreneurs.
• Similarly, male and female entrepreneurs with technical backgrounds earned significantly higher mean investment amounts than entrepreneurs with non-technical backgrounds. Male entrepreneurs with technical backgrounds received a significantly higher percentage investment compared to the mean percentage of the other entrepreneurs. In contrast, female entrepreneur with the non-technical backgrounds received the lowest mean investment amount.
• For female entrepreneurs, regardless of background, having a trusted social tie between the entrepreneur and the evaluator was significantly more important in their evaluations than it was for male entrepreneurs.

Overall, the results find that possessing technical expertise is a significant advantage for female entrepreneurs seeking venture capital but not for male entrepreneurs. Female entrepreneurs with non-technical backgrounds had the lowest assessments of competency and leadership ability, and received significantly less capital investment. The authors posit this finding could help account for the underrepresentation of women receiving venture capital funding for technical ventures.

This study uses a vignette design to simulate funding decisions by venture capitalists (VCs). 114 male Masters of Business (MBA) students in the Stanford Entrepreneur Club, who were considered highly familiar with the industry, were randomly assigned to one of four conditions. Each condition had an identical executive summary of a business proposal, and only varied in the gender and educational background of the entrepreneur (male tech, male non-tech, female tech, female non-tech). Participants were asked to decide whether or not the fund the venture, which already had some financial backing. To simulate high stakes decision making, participants were offered a greater cash incentive ($15 instead of $5) if their evaluation of the proposal matched that of the firm’s.

All participants completed an online survey about their evaluation of the venture and of the entrepreneur. For the venture, they rated their “optimism for the venture” (4 items, scale 1-6) and the percent they would be to invest of the requested $6M (11-point scale between 0 and 100). For the entrepreneur, they rated them on a scale of 1-7 for three qualities: leadership ability (5 items), competence (3 items) and sociability (4 items). Each proposal contained a brief biography of the entrepreneur, including their name (David or Amy), their education (degree in software engineering or history), as well as some experience in the industry (technical or non-technical). Finally, they were asked one question to capture how much they thought the entrepreneur’s social capital mattered (scale 1-6).