New study: Women-led startups perform better if initially funded by women investors

New study of Sahil Raina, an assistant finance professor at the University of Alberta, shows that male and female venture capitalists almost equally invest in female led startups, however, the latter perform better if initially funded by women investors. 

One of the most important findings, proves that the bias of investing in men-led startups among men VCs doesn't really exist: portfolio of female VCs consists of 15.6% of initially financed female-led startups, whereas, for male VCs, this number is even higher 17.4%. This 1.7% difference in female-led startup representation is not statistically significant and suggests that there is no same-gender preference among founders and GPs (or an 15 opposite-gender preference) in terms of financing.

Another finding shows that when a VC firm that invested in a startup’s first round had all male partners, a female-led startup had about a 15% chance of a successful exit while a male-run startup’s odds were around 40%. But when a first-round VC firm had at least one woman partner, founders of both genders had equal chances of success—also around 40%. It means that we need more women investors on early stages.

Last, but not least, VC-financed female-led startups perform worse than their male-led counterparts. The study suggests that this worse performance arises primarily among female-led startups financed and advised by male VCs. While the precise mechanism is hard to pin down, Sahil found some evidence that the performance gap difference between startups backed by female VCs versus male VCs comes from the direct involvement of female VCs in the evaluation of female-led startups.