A Rigged Path to Success? - A Study of Gender Bias in Venture Funding

Abstract: In order for a startup to grow and prosper, access to venture funding is crucial. Throughout recent years, it has become evident that male-led ventures receive a significantly larger share of the total amount of capital allocated to startups than female-led ventures. Since the quality and potential of business ideas vary markedly between different ventures, it has been difficult to determine why female entrepreneurs are at a disadvantage in raising capital. In this thesis, an experiment has been conducted to control for the quality of the startup. Two identical pitch decks have been put together, but one is presented by a male team and the other by a female team, in order to investigate whether investors are gender biased or not. The results show that investors are biased in their investment decisions, and that the entrepreneurs' gender affect how much capital the startup raises. Unlike previous research, this study suggests that investors are not biased in favour of male entrepreneurs. Instead, the investors funded the female team more frequently than the male team, and the female team raised more capital on average. Furthermore, the results indicate that female investors are more gender biased than male investors. We argue that the female entrepreneurs' sudden success in raising capital can be explained by overcompensation as the investors are not investing real money, but also that the Swedish venture funding landscape might be changing for the better, with equal opportunities to succeed, regardless of gender.