Tech investors still do not trust female entrepreneurs due to the prevalence of male founders and the popular perception that top tech tycoons are all young white men, researchers have found.
In a new peer reviewed study, researchers at Vienna University of Economics and Business found that investors backing tech start-ups seek out certainty in their investment decisions, which, due to biased perceptions of gender, places male founders at an advantage when attracting capital.
“Male founders are seen to be less uncertain than their female counterparts because they fit into this stereotype of what not only a tech start-up should be, but any start-up,” the researchers said.
The report is the latest to underline a stark gender funding gap in the venture capital and tech industries in which female founders struggle to raise capital with the ease of their male counterparts.
A survey from the Female Founders Forum in November found that 72 per cent of the UK’s high-growth female founders thought it would have been easier to raise cash if they were a man, while 59 per cent felt they had been discriminated against because of their gender.
Sonja Sperber, who led the latest research from Vienna University, said that the “distinctiveness” of female founders was important for investors but “did not play a crucial role” when convincing them to part with their cash.
“While female founders need to be as different as possible in order to stand out from the competition, the study suggests that being female already deviates too much from the normative standard,” said Sperber, who is a member of the university’s department of strategy and innovation.
“As a result, female founders are not able to prove themselves in the first place because they are simply denied the chance, or the investors’ funding, to do so, regardless of their education or experience.”
A number of initiatives have been rolled out in the UK in the past four years in a bid to close the vast funding gap facing female founders.
Ministers commissioned the annual Rose Review, led by Natwest chief Dame Alison Rose, in 2019 to try and boost female entrepreneurship in the UK and open up access to funding.
Starling Bank founder Anne Boden was also appointed as the chair of a new taskforce designed to increase the number of female entrepreneurs in the UK by half by 2030.
Moves have similarly been made in the private sector to boost access to funding. The 200Bn Club, named after the potential economic contribution female founders could make with better access to capital, rolled out a 12 week programme in London last February designed to accelerate financing to female founders and connect them with leading VCs for early-stage firms.
“Female founders currently receive five times less funding than their male counterparts, with this number falling even lower among minorities, so the 200Bn Club aims to arm females with the expert-led support they need to succeed,” founder Dr Amber Ghaddar told City A.M. last year.