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| 1 minute read

Do investors penalise female founders for lack of industry fit?

Research published recently in Science Advances suggests that investors penalise female founders for lack of "industry fit".

Academics (lead by Dana Kanze from my alma mater London Business School) conducted a study on ventures seeking funding in different industries. They found female-led ventures catering to male-dominated industries receive significantly less funding at significantly lower valuations than female-led ventures catering to female-dominated industries.

In contrast, male-led ventures attain similar funding and valuation outcomes regardless of the gender dominance of the industries to which they cater.

Overall female-led ventures also on average raised noticeably less than male-led ventures.

There was evidence that this is because investors perceive lower degrees of fit between the founding CEO and venture for female-led ventures catering to male- as opposed to female-dominated industries.

Their findings are sadly in line with what many of us probably instinctively expected to be true, but it is interesting to see this expectation borne out by the numbers. The one that stands out to me is that of the sample male-led ventures received on average more than 2.3 times the sums raised by female-led ventures.

While men are afforded credibility across a broad range of industries, women are instead confined to effectively operate in a comparatively less lucrative subset of the labor market.

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business