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Top tech investors still “do not trust female founders”, according to latest research.

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. 

They found that there is a lack of female founders in IT driven start-ups due to a perception that tech start-ups are founded by someone that is young, white, and male.

This effect plays a huge role in tech driven start-ups as their business models are seen to have more uncertainties than those in other industries, therefore investors look for ways to compensate for the uncertainty – by going for start-ups with male founders.

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.

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.”

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.

The study also found that education or support programs for women – something that politicians, associations and institutions have been promoting for a long time – are not the solution.

This is because the basic problem does not lie in education and training but can be traced back to female founders deviating too much from the stereotype.

Instead, the researchers suggest identifying niche markets in which women are not or less underrepresented, and working to establish an alternative stereotype, which filters into the tech sector.

This comes after a survey from the Female Founders Forum 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.

The UK gender investment gap stands at almost £600 billion, with millions more male investors than female investors, and men holding far bigger investment portfolios and pensions.

Author

  • Jennifer Read-Dominguez

    Jennifer Read-Dominguez is founder of The Women's Journal and a digital editorial director with over ten years experience in the media and publishing industry. Jennifer has led the digital transformation strategies for many market-leading lifestyle magazines putting SEO and e-commerce at the forefront. She is also founder of Jeneration Public Relations - a UK digital-first public relations and communications consultancy that provides strategic coverage for clients.

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