More women in venture capital doesn’t mean more funding for female-led businesses, new research suggests − here’s why

Venture capital plays an important role in helping new businesses get off the ground. The field also has a stubborn gender gap. More than 4 in 5 partners at U.S.-based venture capital firms are men, surveys and research show. Perhaps relatedly, VC firms overwhelmingly direct their funds to man-led businesses: In 2023, only about 1 in 4 VC funds were allocated to woman-led companies, according to Crunchbase data. Advocates for gender equity have long called for firms to have more female senior venture capitalists on their teams. The idea is that having more women making investment decisions will translate into more funding for woman-led businesses. As a professor of entrepreneurship, I wondered whether the facts supported this idea. So my co-authors and I analyzed funding decisions from more than 150 mid- and large-sized U.S.-based VC firms over eight years. What we found surprised us: Firms whose decision-making groups included more female senior venture capitalists offered less funding to woman-led businesses. Every additional senior female venture capitalist in a firm’s decision-making group was linked to a 0.46% decline in the proportion of newly funded woman-led businesses in its investment portfolio. Since the average funding round in our sample was $5.4 million,...