Financing The Next VC-Backed Startup: The Role of Gender

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Is there a gender gap in the serial founding of VC-backed startups? We address this question by introducing a new empirical design that exploits differences in future funding outcomes for men and women who cofounded the same startup. We find substantial gender gaps, both on average and following failure or success of the current startup. Following failure, our estimates imply that women are 22.5 percent less likely to found another VC-backed startup compared to their cofounders who are men. Among those who do found another VC-backed firm, women raise 24.6 percent less capital. Moreover, the results of an outcome test show no gender difference in the success probabilities of subsequent startups, despite the large funding gap. The gender gaps that we observe appear to be driven by unequal treatment by investors and not by gender differences in quality or founder preferences. In fact, our analysis of potential supply-side channels reveals striking negative spillovers following investors’ experiences with other women-founded startups. Read more ...