In a nutshell
Women entrepreneurs face stricter investor scrutiny and receive less funding than men, but new research shows these biases can shift, offering hope for change in the startup ecosystem.
In the high-stakes world of startup funding, investors like to think they’re betting on the best ideas. But what if the best ideas aren’t even making it past the first round, not because they lack potential, but because of who’s pitching them? The truth is that women founders receive a fraction of the venture capital men do, despite running equally strong businesses. A recent study on startup pitching events, known as roadshows, sheds light on why: investors apply double standards, unconsciously holding women to stricter expectations.
The study, which tested investor reactions to startup pitches in China and the United States, found that women-led businesses consistently received less funding than their male-led counterparts, even when the pitches and business fundamentals were similar. Investors simply set the bar higher for women, demanding more proof of competence while giving men the benefit of the doubt. This isn’t just about roadshows though – it’s a symptom of a deeper bias woven into the startup ecosystem.
Research has long shown that women entrepreneurs face a different kind of scrutiny from investors. Men are asked about how they will grow and succeed, while women are more often grilled on risk and failure. Men are more likely to be perceived as “visionary entrepreneurs,” even if they lack direct experience, while women are expected to demonstrate flawless competence before securing investment. Investors unconsciously assume that women-led businesses are less scalable and that women choose “less ambitious” industries – even when their ventures are just as promising as men’s. The list of well-documented biases goes on.
Publication Date: December 23, 2024
Authors: Qian Zhang & Sirui Chen
Institutions: Zhejiang Sci-Tech University, China; Shanghai University of Finance and Economics, China
Study Type: Experimental Study
Sample Size: 669 financial practitioners across three experiments (China: 220 + 211; U.S.: 238)
Research Focus: Investigating how gender bias affects startup funding decisions in roadshows (startup pitching events), examining the role of investors’ double standards and how past investment experiences shape bias.
Research Methodology: Three controlled experiments using real-world startup pitching materials from accelerators in China and the U.S. The study manipulated entrepreneur gender and past investment scenarios to measure funding outcomes and investor bias.
Main Findings: Women entrepreneurs receive less funding due to investor-driven gender bias, with stricter competency standards applied to them than to men. However, past exposure to successful women-led startups reduces this bias, showing that investor perceptions can shift over time.
Citation: Zhang, Q., & Chen, S. (2024). “Double standards in roadshows: The impact of investors’ dynamic gender-based bias on the financing performance of women entrepreneurs.” International Journal of Entrepreneurial Behavior & Research. Link
This new study adds another layer to this understanding: when investors have previously seen successful women-led businesses, their biases soften. In other words, exposure to high-performing women entrepreneurs can shift perceptions, making it less likely that future female founders will face the same degree of scepticism.
This “cohort effect” suggests that gender bias in funding isn’t set in stone – it evolves based on experience. That’s a crucial insight for founders, investors, and accelerator programmes alike. It means that increasing visibility for successful women-led startups doesn’t just help those individual businesses; it chips away at the broader bias in the ecosystem.
So what can be done? First, accelerators and investors need to acknowledge that bias isn’t just about outright discrimination – it’s often unconscious, embedded in the decision-making process. Standardising evaluation criteria, ensuring investors receive training on bias, and actively backing more women-led businesses can all help. For women entrepreneurs, this study reinforces the importance of strategic investor selection. Backers who have successfully funded women-led businesses before may be more open to doing so again, making investor history a key factor in fundraising strategy.
More broadly, this research highlights a collective responsibility. Each successful women-led business isn’t just a win for that founder – it helps pave the way for others. As more women secure funding and thrive, the biases holding them back can begin to shift, creating a more level playing field in the long run and making sure that the best ideas, no matter who pitches them, get the chance to succeed.
Learn how investor conditions shape startup outcomes in our Research Recap on when funding comes with strings attached.
