WBS study shines light on start-up funding gender gap

A new study conducted by researchers at Warwick Business School has revealed significant insights into the gender finance gap in start-up funding, shedding light on how biases influence investment decisions.

The findings were presented at a recent event held at WBS London at The Shard, where investors, entrepreneurs, and banking professionals gathered to discuss the art and science of start-up funding.

Led by Noni Symeonidou, Dawn Eubanks and Denis Grégoire, the research explores the $1.7 trillion funding gap faced by women entrepreneurs.

It examines how investors form perceptions of founders during brief pitch interactions, often relying on mental templates of what a “successful founder” looks like.

These biases, the study suggests, contribute to the funding disparity between male and female entrepreneurs.

To test their hypothesis, the researchers experimented with 160 angel and venture capital investors.

Using male and female avatars, they presented two types of pitches: one using “de-risking” language (focused on validation, proof, and feasibility) and another using “hyping” language (emphasising positive features without focusing on feasibility).

Investors were then asked to evaluate their willingness to meet the founders and invest in their start-ups.

The impact of gender on investor trust

The results were striking. Male founders were found to receive more investment support and were trusted more to execute growth, even when all other factors were equal.

Male founders benefited most from hyping language, while female founders gained more from de-risking language.

Interestingly, female investors preferred males who used hype language and females who employed de-risking strategies.

Male investors, on the other hand, favoured a de-risking approach regardless of the founder’s gender.

The findings were discussed by an expert panel at the event, which included investors Vanesa Pazos and Chris Howard, as well as start-up founders Sophie Bruce and Molly Aldridge. The panellists reflected on the research and shared their own experiences in the investment world.

“This research highlights the challenges female entrepreneurs face in securing funding and provides valuable insights into how pitch strategies can be tailored to address these biases,” said Dr Symeonidou.

“We hope this work will contribute to closing the gender finance gap and fostering a more inclusive start-up ecosystem.”

The study emphasises the importance of understanding and addressing biases in investment decisions to create a level playing field for all entrepreneurs.

Further reading:

Why are ambitious female founders penalised by investors?

The key leadership skills for small business growth

Why human relationships are key in venture capital

Growing pains: How to help small businesses scale

Noni Symeonidou is Associate Professor of Entrepreneurship and Innovation at Warwick Business School.

Dawn Eubanks is Associate Professor of Behavioural Science and Entrepreneurship and Innovation at Warwick Business School.

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