Gender bias and discrimination towards women entrepreneurs by venture capitalists – a randomized response survey

2.1. Women entrepreneurs and venture capital

Women play a critical role in the startup scene, and their participation as entrepreneurs is essential to the economy and society for the following reasons. First, a greater heterogeneity of founders leads to a greater diversity of ideas and innovative solutions that can contribute to societal progress, creating new jobs and increasing economic growth (Austin and Nauta Citation2016; Berger and Kuckertz Citation2016; Verheul, Van Stel, and Thurik Citation2006). Further, a higher number of women entrepreneurs creates the possibility for more women to improve their living standards and achieve professional independence, mitigating the persistent gender wage disparity that permeates various domains (Austin and Nauta Citation2016; Calás, Smircich, and Bourne Citation2009; Morris et al. Citation2006; Serrano‐Pascual and Carretero‐García Citation2022).

Despite evidence showing that businesses led by women entrepreneurs perform as well as those led by their male counterparts (Aernoudt and De San José Citation2020; Robb and Watson Citation2012), women entrepreneurs have more difficulty obtaining external capital, which is particularly problematic given that access to financial resources is an essential foundation for a startup’s success (Alsos, John Isaksen, and Ljunggren Citation2006; Eddleston et al. Citation2016; Greene et al. Citation2003). When they raise funds successfully, women founders are disadvantaged with lower amounts (Eddleston et al. Citation2016) and higher interest rates (Mascia and Rossi Citation2017). While women entrepreneurs tend to require less funding due to their businesses’ size and industry sector, which might suggest a greater funding success, the gender gap persists in most funding contexts (Geiger Citation2020).

In the context of venture capital, women also receive less venture capital than men (Brush et al. Citation2014, Citation2018; Lins and Lutz Citation2016; Nigam, Benetti, and Mavoori Citation2022), despite evidence showing that businesses funded by venture capital with women CEOs perform just as well as those led by men (Brush and Elam Citation2024).Women-led ventures are 63% less likely to receive venture capital funding than men-led ventures (Guzman and Kacperczyk Citation2019). In 2019, only 2.8% of startups funded by venture capital in the US were led by women, and this number decreased to 2.3% in 2020 (Bittner and Lau Citation2021). The limited access to venture capital presents a critical barrier for women-led startups. Venture capital not only provides essential financial backing but also crucial expertise and access to networks, which are pivotal for innovation and business growth (Bernstein, Giroud, and Townsend Citation2016; Cumming, Grilli, and Murtinu Citation2017; Wang and Wang Citation2012).

Extensive literature explored various entrepreneur-related (demand-side) and investor-related (supply-side) factors contributing to this gender disparity in traditional equity financing. Arguments are advanced on the entrepreneurial-related side, suggesting that gender bias stems from the decisions and behaviors of women entrepreneurs. The low percentage of women entrepreneurs securing venture capital partly results from their concentration in sectors less favored by venture capitalists and their underrepresentation in technology sectors. Moreover, one might assume that women entrepreneurs may exhibit less proactive efforts in seeking venture capital, a tendency observed in various financing contexts (Kwapisz and Hechavarría Citation2017). Yet, when women entrepreneurs actively pursue venture capital, they demonstrate a success rate comparable to men entrepreneurs (Aernoudt and De San José Citation2020).

Nevertheless, research subsequently challenges arguments attributing the underrepresentation of women in venture capital solely to entrepreneur-related factors. Lange and Sopp (Citation2024) demonstrated that women entrepreneurs submit more venture capital funding requests than men. Gompers and Wang (Citation2017) argued that entrepreneur-related factors such as women’s education and work experience only partially explain the gender gap, emphasizing that investor-related preferences and structural barriers also significantly contribute to this disparity. Similarly, Serwaah and Shneor (Citation2021) highlighted that perceived structural barriers and investor-side discrimination impact women’s access to venture capital, including issues related to lower demand for funding.

Investor-related arguments are crucial in explaining the gender gap, as the composition of the management team, especially the gender of the founders, significantly influences investment decisions (Gompers et al. Citation2020). Investors often use the gender of the founder as a criterion for evaluating the fit between the venture and its leadership, a tendency observed in environments characterized by high uncertainty (Lee and Huang Citation2018; Thébaud Citation2015). In such cases, investors may rely on superficial characteristics, including the founder’s gender, to guide their decisions (Tonoyan and Strohmeyer Citation2021; Vazirani et al. Citation2023). Further, investor-related arguments highlight the influence of investor perceptions and industry dynamics on the funding gap. Investors exhibit greater skepticism towards women entrepreneurs with innovative business ideas because of perceived deviations from traditional gender roles (Liao et al. Citation2023). This skepticism results in reduced funding support for women, as investors expect similar biases from their peers. In addition, women-led ventures receive significantly less financing at lower valuations when operating in men-dominated industries than in women-dominated ones. Investors perceive that women CEOs may not align with the expected leadership traits in these industries, affecting funding decisions unfavorably. Men-led ventures did not experience this disparity (Kanze et al. Citation2020).

While women entrepreneurs often face disadvantages in traditional equity financing, their advantages become evident in crowdfunding (Zhao, Xie, and Yang Citation2021). Equity crowdfunding offers a favorable avenue for women entrepreneurs, as demonstrated by Bapna and Ganco (Citation2021), who found no gender discrimination among experienced investors. Johnson, Stevenson, and Letwin (Citation2018) discovered through a laboratory study that amateur low-risk investors prefer women entrepreneurs over men because they perceive women as more trustworthy. In addition, Greenberg and Mollick (Citation2017) noted women’s greater success in crowdfunding campaigns than men, particularly for technology-oriented projects where fewer women entrepreneurs participate. However, for a comprehensive analysis, it is also essential to consider the findings of Cumming, Meoli, and Vismara (Citation2021), who revealed that women entrepreneurs do not experience an increased likelihood of fundraising success through equity crowdfunding.

Moreover, there are advantages for women entrepreneurs in the outreach process. Gornall and Strebulaev (Citation2020) identified through a field experiment that venture capitalists and business angels show no initial biases but rather an increased interest in women entrepreneurs during the first contact. However, the authors emphasized that this positive response pertains solely to the initial phase of the innovation process, and they cannot rule out potential discrimination in subsequent personal interactions.

In sum, women are not consistently disadvantaged in financing, particularly when involving amateur investors where both women and men investors are present. However, the advantages observed in crowdfunding are less applicable to traditional equity financing, such as venture capital, where participation is predominantly limited to professional investors, and men investors constitute approximately 93% in the US (Brush et al. Citation2018). This disproportionate representation of men investors significantly contributes to the gender gap observed in venture capital financing (Balachandra Citation2020).

2.2. Gender stereotypes and gender role congruity theory

A significant reason for the financial disadvantage lies in gender stereotypes addressed in gender role congruity theory. Gender stereotypes are people’s shared beliefs about the characteristics and attributes of women and men (Eagly and Karau Citation2002), distinguishing between descriptive and prescriptive norms. Descriptive norms describe how women and men are, while prescriptive norms describe how women and men should be (Heilman Citation2012). Therefore, gender stereotypes impact how information about women and men is processed and evaluated, as they prescribe how they should behave (Eagly and Karau Citation2002; Eddleston et al. Citation2016).

Eagly (Citation1987) stated that most beliefs about gender can be divided into agentic or communal properties, affecting the categorization of occupations. Society typically attributes more strongly agentic traits, such as ambition, dominance, aggressiveness, and independence, to men. In contrast, society attributes communal traits, like helpfulness, friendliness, warmth, and cooperativeness, more often to women (Eagly Citation1987; Heilman Citation2012). According to Cejka and Eagly (Citation1999), the stereotypical traits attributed to women and men influence the categorization of various occupations, considered men’s or women’s occupations. Research assumes that entrepreneurs in men- and women-dominated occupations can only succeed if they exhibit relevant gender-stereotypical attributes (Eagly Citation1987; Heilman Citation1997).

Society often associates entrepreneurship with a men-typed occupation, creating a barrier for women entrepreneurs (V. K. Gupta et al. Citation2009; Koch and Kuckertz Citation2024). In performing their gender role, which they characterize as warm and helpful, society perceives women as incongruent with the professional role of an entrepreneur (Eagly and Karau Citation2002). This perceived incongruence is a barrier for women, as they are viewed with skepticism and judged less competent than men (Eddleston et al. Citation2016; V. K. Gupta et al. Citation2009). The consideration of women showing more masculine characteristics to be successful in entrepreneurship has been rejected by research (Koenig et al. Citation2011). A study by Heilman et al. (Citation2004) showed that women leaders with masculine behaviors are considered overly assertive, are evaluated negatively, and result in career-impacting consequences.

Access to finance is also negatively affected by gender stereotypes, with women entrepreneurs perceived as less credible by investors (Alsos, John Isaksen, and Ljunggren Citation2006; V. K. Gupta, Wieland, and Turban Citation2019). A study by Kanze et al. (Citation2018) found that stereotypes lead venture capitalists to ask gender-specific questions that negatively impact funding outcomes for women entrepreneurs. Thus, venture capitalists ask men entrepreneurs promotion-focused questions, while they ask women entrepreneurs prevention-focused questions (Kanze et al. Citation2018). Malmström et al. (Citation2020) also found a biased evaluation of women entrepreneurs, which negatively affects the amount of funding. Men who signal entrepreneurial attitudes face promotional considerations, while women face preventive considerations. Cognitive resistance to preemptive questions is most substantial among the most deserving women (Malmström et al. Citation2020).

This issue of industry affiliation is also closely tied to gender roles. When women entrepreneurs operate in men-dominated industries, they are perceived as not conforming to the expected gender role and are, therefore, evaluated more negatively (Kanze et al. Citation2020). Interestingly, the choice of industry has a different impact in the context of equity crowdfunding. Wesemann and Wincent (Citation2021) suggested that women can improve their crowdfunding success by strategically emphasizing gender, using women-centric language, and targeting men-dominated sectors.

Gender-specific biases influence venture capitalists’ evaluations even when they are legally required to maintain a gender-neutral stance. In evaluating women-led businesses, these venture capitalists exhibit gender bias by disproportionately focusing on women entrepreneurs rather than the business and market characteristics considered for men entrepreneurs (Johansson et al. Citation2021).

Despite facing disadvantages in traditional venture capital sources, women entrepreneurs find advantages in crowdfunding, where research underscores the nuanced effects of gender stereotypes. Amateur investors with low stakes perceive women entrepreneurs as more trustworthy in crowdfunding, which aligns with stereotypical gender roles and leads to a preference for them (Johnson, Stevenson, and Letwin Citation2018). Moreover, women entrepreneurs are more likely to attract capital successfully when their signals align with the expected stereotypical gender roles. Conversely, if the signals deviate from these stereotypes, they are evaluated less positively in equity crowdfunding (Kleinert and Mochkabadi Citation2022). Within the context of a social impact accelerator, both men and women receive better evaluations when their signals align with expected gender roles. However, incongruence between signals and gender roles disproportionately impacts women negatively (Yang, Kher, and Newbert Citation2020).

Nevertheless, these benefits have not translated into advantages in venture capital. Gender bias persists in this realm, impacting women entrepreneurs’ access to funding opportunities (Balachandra Citation2020). Despite extensive research utilizing gender role congruity theory to explain these disparities (Balachandra et al. Citation2019; Malmström, Johansson, and Wincent Citation2017; Zhao, Xie, and Yang Citation2021), the fundamental challenges posed by gender stereotypes in venture capital remain unresolved.

2.3. Exploring prejudice and discrimination as additional barriers to financing of women entrepreneurs

To understand the financial disadvantage women entrepreneurs face, we need to distinguish between gender stereotypes and prejudice, another foundation for gender bias and discrimination, a potential resulting action. While a stereotype is a generalized idea about a particular group, prejudice is an attitude toward a group and its members (Dovidio et al. Citation2010). Most researchers assume prejudice to be a negative attitude (Dovidio et al. Citation2010), and Allport (Citation1954, 9) named prejudice as “an antipathy based on faulty and inflexible generalization. It may be felt or expressed. It may be directed toward a group as a whole or an individual because he [sic] is a member of that group”. Like gender stereotypes, prejudices can produce gender bias, leading to discrimination (Heilman Citation2012). Discrimination is another form of gender disadvantage, which describes the inappropriate and harmful treatment of individuals based on group membership (Fiske Citation1998). Gender bias can manifest in discrimination that occurs directly when one group or individuals are actively mistreated or, more subtly, indirectly when one’s group is unfairly favored, thereby disadvantaging another group (Dovidio et al. Citation2010; Fiske Citation1998).

All three aspects of gender disadvantage influence each other. Gender stereotypes and prejudices form the basis for discrimination. By systematically influencing perceptions and judgments, thus creating biased attitudes toward particular groups, they can lead to unequal behavior, that is, discrimination. Further, discrimination can cause stereotypical ideas to become more widely held and entrenched, which justifies and reinforces discrimination (Fibbi, Midtbøen, and Simon Citation2021). Individual and group perceptions and behavior can reveal prejudices and stereotypes, even though they are often unconscious, subjective, and not easily noticeable. If these lead to discrimination, the disadvantage can become visible, for example, in the form of missing equal opportunities or direct rejection (Fiske Citation1998).

Women entrepreneurs face financial disadvantages due to prejudices, stereotypes, and discrimination, which can manifest subtly or overtly during investment. For example, the disadvantage may be expressed through hidden prejudices and stereotypes when investors harbor negative attitudes toward women entrepreneurs without overtly telling them (Edelman et al. Citation2018). In other cases, disadvantages can become discrimination when venture capitalists reject women entrepreneurs for funding without an explainable reason while they support men entrepreneurs (Kanze et al. Citation2018; Nigam, Benetti, and Mavoori Citation2022). These disadvantages can undermine the potential success of women-led ventures and perpetuate the gender gap in entrepreneurship.

2.4. Gender bias and gender discrimination in venture capital evaluation of women

Although empirical studies show that women entrepreneurs positively impact the success of startups (Brush et al. Citation2018), gender bias, grounded in gender stereotypes and prejudices, causes venture capitalists to perceive women entrepreneurs as role incongruent, which can lead to discrimination by venture capitalists. To better understand the impact of gender bias on venture capitalists’ deliberations and actions, we will examine three potential scenarios below and explore the extent to which disadvantage exists.

First, we argue that venture capitalists may be gender biased when evaluating founder teams. Empirical evidence suggests that teams with a balanced gender mix perform better in sales and profits than men-dominated teams (Hoogendoorn, Oosterbeek, and van Praag Citation2013). However, despite the advantage of mixed teams, only 15% of venture-funded startups include a woman on the leadership team (Brush et al. Citation2018). Therefore, we expect mixed teams are not preferred, and venture capitalists do not consider women’s participation in entrepreneurial teams essential. Thus, this behavior would not be rational and driven by gender bias since rational behavior would imply valuing gender diversity.

Hypothesis 1.

Gender bias by venture capitalists materializes as venture capitalists do not value gender diversity in founding teams.

Second, we argue that venture capitalists may be gender biased when evaluating women’s performance. According to Brush et al. (Citation2018), venture capital-financed companies with women CEOs perform just as successfully as men CEOs, a finding substantiated by additional studies (Aernoudt and De San José Citation2020; Robb and Watson Citation2012). Therefore, bias-free and rational behavior would imply that an evaluation of a woman entrepreneur should not be fundamentally negative. However, based on gender role congruity theory, women are not considered legitimate in the role of a founder and are evaluated less favorably. Therefore, we assume that venture capitalists partially rate women as poor entrepreneurs without having previously received background information on the women entrepreneurs. Again, this implies biased behavior influenced by gender bias.

Hypothesis 2.

Gender bias by venture capitalists materializes as women entrepreneurs are evaluated as low-quality entrepreneurs.

Third, we argue that the gender biases considered may lead to discriminatory behavior by venture capitalists. High-risk investment decisions consider apparent characteristics such as gender (Tonoyan and Strohmeyer Citation2021), resulting in sometimes non-rational decisions due to gender bias. A study by Nigam, Benetti, and Mavoori (Citation2022) demonstrated this unfair treatment, which shows that men entrepreneurs receive more funding from venture capitalists than women entrepreneurs, as venture capitalists were biased. Consequently, we also expect a different treatment because some venture capitalists do not like investing in women. In this case, gender bias would result in discrimination, as the unequivocal non-investment in women entrepreneurs represents an inappropriate and harmful treatment of women entrepreneurs.

Hypothesis 3.

Gender discrimination by venture capitalists materializes as venture capitalists make investment decisions based on gender.

illustrates three scenarios of disadvantages for women entrepreneurs, aligned with our hypotheses on gender bias and discrimination. The first two scenarios depict gender bias, where venture capitalists fail to value gender diversity in teams and rate women entrepreneurs less favorably. The third scenario represents gender discrimination, where venture capitalists explicitly avoid investing in women. These scenarios highlight how gender bias can escalate into discrimination.

3.1. Data

We used a quantitative research design to explore our research question. Specifically, we conducted an online-based survey with venture capitalists. We created the list of participants using Crunchbase, an online platform and database that provides information on new ventures and investors worldwide, including venture capitalists (Crunchbase Citation2023). Researchers using the database emphasize its reliability, timeliness, and comprehensiveness (Block, Fisch, Obschonka, et al. Citation2019; Fisch and Block Citation2021; Ter; Wal et al. Citation2016). Identifying 16,114 venture capital companies with available email addresses, we emailed invitations on May 10^th, 2022, and sent two reminders over eight weeks, with the final reminder issued on July 10^th, 2022. We identified 3,739 profiles as inactive or without a correct email. Out of the initial contact with 12,375 firms, 485 venture capitalists responded, resulting in an initial response rate of 3.92%, which is typical for this population (Block, Fisch, Vismara, et al. Citation2019). Factors including the questionnaire’s length, time constraints, and reluctance to participate in surveys on sensitive issues may influence the low response rate. In addition, as we partly relied on generic email addresses (e.g., info@domain.com) sourced from Crunchbase this may have limited direct contact with key decision-makers, potentially affecting survey participation. To control for non-response bias, due to the anonymity of the survey design, it was not possible to compare respondents directly to non-respondents. Hence, we resorted to a classic test and compared early to late respondents (Wallace and Cooke Citation1990). This procedure yielded no significant differences for variables such as continent, gender, and age, giving us credibility that our results are not affected by non-response bias.

After excluding 124 incomplete surveys (25%), our final sample consisted of 361 participants. contains the descriptive statistics of the sample. Participants’ mean age was 44.7 years (SD = 12.0), with 74% being men. Job titles were predominantly partner or CEO (70.4%). Geographically, 45.7% worked in Europe, while 28.8% were from North America. Investment focus was mainly on seed stage (43.2%) or early stage (43.2%). The majority (80.9%) belonged to independent venture capitalist firms, with corporate venture capitalists accounting for 9.7%.

3.2. Analytical approach

We asked participants about three sensitive statements related to women’s entrepreneurship. These statements were:

1. The participation of women in founding teams is overrated.

2. Women are poor entrepreneurs.

3. I do not like to invest in women.

Surveys, including sensitive questions or reactions to critical statements, are often answered by respondents in a way that deviates from the truth because respondents do not want to deviate from the social norm (Tourangeau and Yan Citation2007). This response behavior can lead to significant biases in survey estimates, observed in surveys on drug use or racism (Tourangeau and Yan Citation2007).

We decided to conduct a randomized response survey to reduce bias due to social desirability. The randomized response technique (RRT), originally introduced by Warner (Citation1965), initially presents respondents with two opposing statements, such as statement A, “I have stolen before” and statement B, “I have never stolen”. Subsequently, a random device, such as a dice, determines which statement the participant should respond to. The random experiment takes place secretly, ensuring that the experimental team remains unaware of which statement the respondent answers. Since the given answer does not reveal which specific question the respondent addresses, the process maintains credible anonymity. However, knowing the randomization probability for the experimental team can be used to determine a sample-level estimate of the sensitive characteristic’s prevalence (Warner Citation1965).

Due to the simplified implementation, as no random device needs to be used by the respondents, we chose a further development of the original RRT, the Crosswise Model (CWM) (Hoffmann et al. Citation2015). The method ensures participant anonymity by presenting two statements. Respondents can then either indicate that both or neither of the statements are true or that only one statement is true. One statement represents a sensitive characteristic with unknown prevalence. In contrast, the other represents a non-sensitive characteristic with known prevalence in the population (e.g., my father was born in November or December). With no direct question answered, it becomes impossible to discern which statement applies to each respondent individually, establishing credible anonymity and facilitating honest responses to sensitive questions (Lensvelt-Mulders et al. Citation2005; Yu, Tian, and Tang Citation2008).

Studies have shown that the CWM provides higher, and thus potentially more valid, estimates of the prevalence of sensitive traits than direct questions (Hoffmann, Meisters, and Musch Citation2020; Jann, Jerke, and Krumpal Citation2012). Its application spans various fields, including investigating biases against women leaders (Hoffmann and Musch Citation2019) and measuring cognition-enhancing drug use among university students (Dietz et al. Citation2013). Furthermore, two recent meta-analyses on the validity of the CWM demonstrate its superiority over direct questions, which are powerful for more sensitive topics and well-educated respondents (Sagoe et al. Citation2021; Schnell and Thomas Citation2021).

Additionally, the CWM presents significant advantages over randomized field experiments. Randomized field experiments require controlled environments and are often logistically challenging, time-consuming, and costly. In contrast, the researcher can readily deploy the CWM across various survey formats, including online and offline modalities. This approach facilitates a more efficient collection of data on sensitive topics from larger and more diverse populations, as in the case of international samples. Furthermore, field experiments may be impractical due to validity concerns, particularly the generalizability of results derived from specific contexts and constrained sample sizes (Yu, Tian, and Tang Citation2008).

Detailed instructions and understanding of controls can help increase the method’s validity, especially for highly educated people (Meisters, Hoffmann, and Musch Citation2020), such as venture capitalists. Consequently, we provided participants with a comprehensive introduction to the CWM procedure in our survey (see for the introduction of the CWM in our survey).

The survey ensured participant anonymity by avoiding direct questions and utilizing two statements, one of which pertained to a non-sensitive characteristic with a known prevalence. We employed the month of the father’s birth (“My father was born in November or December”) as the known prevalence, denoted as p = 61/365. We assured participants the survey did not ask about the father’s birthday, preventing individual inference regarding the sensitive question. The survey asked participants’ attitudes on a total of three sensitive topics related to women’s entrepreneurship, each paired with a neutral statement: “My father was born in November or December” (first case), “I was born in November or December” (second case), and “My best friend was born in November or December” (third case).

Participants selected either “The answer to both questions is the same (twice yes or twice no)” or “The answers to the two questions are different (once yes and once no, irrespective of the order)”. We followed the same procedure for the two remaining statements, using distinct sensitive statements. To ensure confidentiality, we clarified that no one involved in the study or evaluation of the survey could know the father’s birthday. Additionally, participants provided information about age, gender, nationality, and occupation. Occupation details encompassed workforce size, geographical location, investment stage, venture capitalist affiliation, and job title.

Table 2. Prevalences in the sample.

5.1. Theoretical implications

We conducted a survey based on the CWM to examine the gender bias of venture capitalists toward women entrepreneurs. Using indirect questioning techniques to reduce socially desirable answers, we asked venture capitalists three critical statements about their attitudes toward women entrepreneurs. Our research results indicate a general gender bias against women entrepreneurs among venture capitalists and that, in some cases, they show discriminatory behavior. The statement with the lowest level of gender disadvantage was the most endorsed and vice versa, indicating that the CWM reflects a realistic prevalence estimate.

The decreasing prevalence also suggests that despite the prejudices and gender stereotypes many venture capitalists hold against women entrepreneurs, these do not necessarily lead to discriminatory behavior. Instead, this may be due to individuals being aware of and actively challenging their biases. This ability was demonstrated in a study by Régner et al. (Citation2019), showing that people can overcome their own gender biases when aware of their existence. , which we have further developed based on , shows the declining prevalence and the statements.

Considering gender, the prevalence estimates of women venture capitalists are below that of men venture capitalists in all three statements, showing that women venture capitalists are less prejudiced than men venture capitalists and are less likely to engage in discriminatory behavior. These results align with previous research on role incongruity theory (Eagly and Karau Citation2002), which assumes that men perceive the incongruity between the gender role of women and the social role of an entrepreneur more strongly.

The findings also align with the theory of homophily, a well-documented phenomenon across multiple academic disciplines (Brashears Citation2008; Friedmann and Efrat-Treister Citation2023), wherein individuals tend to form connections and associations with others who share similar demographic characteristics. Regarding funding, the impact of gender homophily occurs in the fact that men venture capitalists prefer to invest in men entrepreneurs, which is also suggested in the present analysis (Brush et al. Citation2018). Conversely, the assumption by Kanze et al. (Citation2018) regarding women venture capitalists not supporting women entrepreneurs could not be supported nor refuted due to a lack of statistical significance. However, given the importance of the initial sensitive question, emerging evidence supports the theory of homophily, suggesting that women venture capitalists are more supportive of mixed teams and, thereby, women entrepreneurs than men venture capitalists.

Considering the type of investment firm, the gender bias among corporate venture capitalists is higher than that of independent venture capitalists. Corporate venture capital plays a vital role in the venture capital ecosystem and offers additional benefits besides financing, such as access to further resources and improved innovation behavior (Alvarez-Garrido and Dushnitsky Citation2016; Martini and Rossi Citation2019; Röhm Citation2018; Röhm and Andreas Citation2020). Reducing the fundamental gender bias against women entrepreneurs in this form of venture capital is essential to enable them to participate in the growing number of corporate venture capitalists (Röhm Citation2018; Souitaris and Zerbinati Citation2014).

Comparing the results by continent of origin, there is no clear pattern. However, it is notable that participants with North American origin often show lower bias, while those with Asian origin frequently exhibit the highest bias, such as in the belief that women are poor entrepreneurs. One reason for these disparities may be the deeply entrenched patriarchal structures in Asia, which hinder women entrepreneurs from accessing financial capital. However, a holistic analysis and contextualization of these findings for Asia compared to Europe and North America is challenging for several reasons. First, there are fundamental economic, cultural, and social differences between Asia and the Western context. Second, Asia displays significant heterogeneity, distinguishing between developing and developed countries. Therefore, it cannot be assumed, for instance, that perceptions of entrepreneurship in India, where gender-neutral portrayals may benefit women entrepreneurs due to reduced incongruence with gender stereotypes (A. Gupta, Batra, and Gupta Citation2022), are representative across the entire Asian continent. Third, research on women entrepreneurship and venture capital in Asia remains limited (Franzke et al. Citation2022).

The Global Gender Gap Report is invaluable for understanding cultural gender differences. It provides insights using dimensions such as economic participation and educational attainment to assess gender parity (Kali Pal et al. Citation2024Citation2024). Achieving parity in these dimensions is crucial for entrepreneurship, as economic parity contributes to narrowing the gender gap in this domain (Vracheva and Stoyneva Citation2020). In 2024, Europe displays the highest gender parity at 75%, followed by North America at 74.8%. East Asia and the Pacific trail behind at 69.2%, and Southern Asia at 63.7%, underscoring differences within Asia. Notably, Europe and North America have achieved a higher increase in gender parity (+6.3% for Europe and + 4.3% for North America) since 2006 compared to Asian regions (+3.1% for Eastern Asia and + 3.9% for Southern Asia), suggesting a more pronounced advancement in the Western context. Therefore, the lower gender parity in Asian regions may suggest less supportive environments for entrepreneurship activities, particularly those requiring substantial capital investment (Kali Pal et al. Citation2024).

In summary, the prevalence across all three statements was relatively high, which points to inequality between women and men entrepreneurs in venture capital funding. Nevertheless, there is a difference in the extent to which gender biases are relative to discriminatory actions. Further, in contrast to the study by Balachandra et al. (Citation2019), which showed that investors harbor bias not against females but against women’s stereotypical behavior, our results thus suggest that many venture capitalists are, per se, biased against women.

5.2. Practical implications

The findings presented have important implications for science and practice. First, we quantify a problem researchers have mainly documented as existing in general but without information about its extent. We did this by using an indirect questioning technique to arrive at a more realistic estimate of the prevalence of debatable answers to our critical questions. Since the present study reveals biases of venture capitalists, researchers should critically evaluate studies relying on conventional surveys that reveal very little or no bias. Instead, we suggest using an indirect survey technique for critical questions to minimize bias due to social desirability here and in other contexts. Additionally, our introduction of this innovative method to the field highlights the advantages of the CWM in measuring sensitive issues. Compared to field experiments, its ability to mitigate social desirability biases inherent in direct questioning and efficiently collect international data underscores its versatility and potential for comprehensive application across various domains of sensitive topics (Yu, Tian, and Tang Citation2008).

Second, the study emphasizes the urgent need for a mindset shift among venture capitalists and provides actionable insights to drive this change. The results demonstrate gender bias in finance, underscoring that recognizing these potentially conscious and unconscious biases is a critical first step toward implementing effective countermeasures. A key approach to achieving this shift is targeted workshops and training programs investment firms implement at the organizational level. Such initiatives can provide practical tools for identifying and challenging gender stereotypes in investment practices. These programs should target both men and women venture capitalists, as research indicates that both genders tend to associate entrepreneurship more strongly with men-associated traits (Karlstrøm, Marie Jansen, and Solheim Citation2024). By fostering critical reflection on individual and collective bias, such programs enable investors to question and mitigate gender stereotypes actively.

However, as Gompers and Kovvali (Citation2018) argue, mandatory diversity initiatives may backfire, possibly leading to resistance and diminished performance. Instead, fostering diversity through voluntary measures appears more sustainable. Calder-Wang and Gompers (Citation2021) show that venture capital partners with daughters are more likely to hire women partners. These results suggest that personal experience, such as parenting daughters, can create a heightened awareness of gender disparities. These partners may also be more inclined to act as mentors, a crucial factor in supporting women venture capitalists in a men-dominated industry (Gompers et al. Citation2022). Therefore, diversity initiatives should prioritize voluntary participation and leverage the power of personal experiences to foster lasting organizational change.

An additional consideration is the implementation of standardized evaluation criteria by investors and venture capital firms, regularly assessing these criteria for gender biases. Furthermore, in the early stages of the evaluation process, such as during pitch submissions, anonymized procedures can help mitigate unconscious biases during initial reviews. However, since the team plays a crucial role in investment decisions (Gompers et al. Citation2020), anonymization should only be used at the outset to objectively assess the business idea’s quality before personal meetings occur in later stages.

Third, the results highlight the importance of increasing women venture capitalists’ presence and offering strategies to achieve this transformation. Our results show that women venture capitalists tend to have fewer biases against women entrepreneurs. However, given that approximately 93% of venture capitalists in the US are men (Brush et al. Citation2018), this lower bias may have limited immediate impact. Based on the literature results, collaboration with women venture capitalists is initially not considered advantageous for women entrepreneurs. Women entrepreneurs face challenges obtaining additional funding when their initial investment comes solely from women investors and are perceived as less competent, resulting in lower evaluations (Snellman and Solal Citation2023). Moreover, collaboration with men venture capitalists can improve performance for women-led startups (Butticè, Croce, and Ughetto Citation2023). However, these approaches have significant limitations, as this positive effect on performance only occurs under specific conditions: the startup must be in its early stage, operate in the high-tech sector, and the investor must operate from the same country and possess substantial experience. Additionally, this model is effective only when the participants adhere to socially expected roles, which contradicts the goal of fostering a diverse and inclusive entrepreneurial environment. Therefore, in the short term, men investors supporting women entrepreneurs can result in improved performance. However, in the medium to long term, legitimizing women investors is essential to fully realizing their potential and fostering a more inclusive and diverse environment in the venture capital industry (Butticè, Croce, and Ughetto Citation2023). Consequently, our recommendation is not to rely exclusively on men investors. Instead, women entrepreneurs can benefit from mixed investment teams to gain all advantages (Snellman and Solal Citation2023).

More involvement of women venture capitalists also has significant implications for venture capital firms. Although women investors currently exhibit lower success rates compared to men investors (Gompers et al. Citation2022), this disparity is not a reflection of competence but rather stems from structural issues such as inadequate colleague support and limited opportunities to leverage their peers’ extensive experience (Gompers et al. Citation2022). Women and men investors bring distinct perspectives and approaches to investment decisions, making a diverse team essential. Women’s tendency towards greater risk aversion often translates into more cautious yet potentially stable investment strategies (Croson and Gneezy Citation2009; Serwaah and Shneor Citation2021). Integrating both perspectives allows a diverse investment team to effectively balance risk management with growth opportunities, enhancing overall portfolio resilience and performance. In addition, mixed teams help mitigate homophily effects, where individuals may unconsciously favor those of the same gender in investment decisions. Empirical evidence underscores the value of such diversity: Calder-Wang and Gompers (Citation2021) showed that increased gender diversity in venture capital firms improves investment performance, highlighting the clear business benefits of diversity.

In light of these advantages of a higher proportion of women venture capitalists for both entrepreneurs and investment firms, attention must now turn to strategies for increasing their representation. Public visibility is a critical factor in addressing gender imbalances. Women venture capitalists can play a pivotal role by participating in panels, conferences, and other public forums, enhancing their presence and altering societal perceptions of women in the venture capital sector. Such visibility not only challenges entrenched gender stereotypes but also inspires more women to consider careers in this field (Brush et al. Citation2018; Eagly and Karau Citation2002).

Another approach often proposed to address the underrepresentation of women in various professional domains is the introduction of gender quotas. While quotas have been increasingly adopted as a policy tool to enhance gender diversity in leadership positions (Poletti-Hughes and Briano-Turrent Citation2019), their efficacy and broader implications remain debatable. Quotas can increase the representation of women, promote gender equity, and generate visible role models, potentially encouraging more women to pursue careers in venture capital (Beaman et al. Citation2012). However, they may also lead to unintended consequences, such as resistance within organizations and the stigmatization of women recruited under such measures, which may be perceived as less competent or as beneficiaries of preferential treatment rather than merit (Leibbrandt, Choon Wang, and Foo Citation2018).

In the venture capital industry, the applicability and effectiveness of gender quotas are particularly contentious (Calder-Wang and Gompers Citation2021). While they could temporarily alleviate the gender imbalance, quotas address symptoms rather than root causes, such as entrenched biases and the absence of inclusive organizational cultures. Sustainable progress is more likely to result from voluntary, long-term interventions, including unconscious bias training, promoting inclusive work environments, and mentoring programs to foster gender diversity. If policymakers implement quotas, they need to complement them with comprehensive initiatives to mitigate potential drawbacks and ensure a meaningful and lasting impact.

Building on the outlined implications, we present specific recommendations for different actors involved in the venture capital ecosystem to advance these initiatives. These recommendations, detailed in , are designed to reduce gender bias and promote a more inclusive environment for women entrepreneurs.

5.3. Limitations and future research

Regardless of its contributions, the study has some limitations that reveal possibilities for further research. The statements are grounded in a broad perspective of gender bias, which is why the answers depend on the personal definitions of the respondents. For example, the definition of a bad entrepreneur is a matter of opinion. In the present study, however, we have consciously kept the statements open to query a general attitude of venture capitalists toward women entrepreneurs. Based on this general study, further studies with more detailed statements can follow to investigate possible causes and effects. For example, researchers could investigate under which conditions women in the team contribute to or obstruct the investment decision and which criteria contribute to assessing women as bad entrepreneurs. Due to the sensitive questions, researchers should use an indirect questioning method.

However, the method has limitations that require consideration. First, for a more valid prevalence estimate, the CWM requires that participants are aware of their attitudes and behavior and can express them honestly. While the CWM reduces socially desirable answers, it does not capture implicit attitudes, which may still influence the responses (Hoffmann and Musch Citation2019; Tourangeau and Yan Citation2007). This limitation aligns with the findings of Zacharakis and Dale Meyer (Citation1998), who argued that venture capitalists often have a limited understanding of their decision-making process, making it challenging to understand the subconscious bias that may influence their evaluation fully. Future research could explore methods allowing a more direct assessment of implicit biases. For example, experimental designs could provide deeper insights into how subconscious attitudes influence venture capitalist decisions.

Second, the sample size must be sufficiently large to compensate for the CWM’s comparatively lower statistical power than the direct survey (Hoffmann et al. Citation2015). In this study, the sample size was sufficient. Still, compared to other studies employing the CWM, it was relatively small, particularly the number of women venture capitalists, but representative of the population of women investors.

Third, the method guaranteeing their anonymity must be credibly explained to the participants so that they answer honestly. Since the present study included comparatively well-educated respondents, we assume that a high percentage understood and followed the instructions. Fourth, even though participants understood the instructions, we cannot rule out that, to some degree, respondents still answered in a socially desirable manner. Therefore, we should regard the results as a conservative estimate.