Technical Background and Social Capital are Success Factors for Female Entrepreneurs

5 mins read · 2015
Tinkler, J. E., Bunker Whittington, K., Ku, M. C., & Davies, A. R.

Venture Capital · Gender · Entrepreneurship

This is a summary of “Gender and venture capital decision-making: The effects of technical background and social capital on entrepreneurial evaluations” (2015). This article aims at providing answers on the relation between gender biases based on technical educational background.

Successful women entrepreneurs – those who have founded high-tech companies – are similar to their men peers in their education and experience. (Cohoon, Wadhwa, and Mitchell 2010, p.7)

Summary

By understanding the gender gap in high-tech entrepreneurship, we can learn about the decision-making process that occurs for men and women also; many corporate organizations are boosting their efforts to encourage women's participation in technical work through training and social networking programs; studies like these can shed some light on the policy-making process to address unconscious biases. This research aims to understand whether relevant education/experience or not having it vests the same advantage or disadvantage to women and men entrepreneurs; additionally, holding a social tie to investors matters differently for women and men entrepreneurs.

Methodology

The research uses an experimental design to draw implications about the relations of having a technical background with gender biases in performance evaluations of male and female entrepreneurs and their proposed ventures. To get some insights into the VC funding process, the authors conducted exploratory interviews with entrepreneurs and venture capitalists in Silicon Valley, followed by a vignette design to simulate funding decisions by venture capitalists (VCs). The participants for this study were 114 male Masters of Business (MBA) students in the Stanford Entrepreneur Club who were considered highly familiar with the industry. They were randomly assigned to one of four conditions. To maintain consistency in the evaluation process, each participant was provided with an identical executive summary of a business proposal and divided by the gender and educational background of the entrepreneur (male tech, male non-tech, female tech, female non-tech). As part of the survey, participants were asked to decide whether or not the fund the venture, which already had some financial backing.

Key findings

• Leadership abilities: Female entrepreneurs with technical backgrounds possess significantly higher leadership abilities than male peers with technical backgrounds. In comparison, holding no technical background, female entrepreneurs were perceived as having fewer leadership abilities than male entrepreneurs with non-technical backgrounds.

• Female entrepreneurs with non-technical backgrounds were considered less competent than female entrepreneurs with technical backgrounds. However, no difference in competency level is observed for male entrepreneurs irrespective of having or not having a technical background.

• Sociability: Male and female entrepreneurs with non-technical backgrounds were allocated higher sociability ratings than their technical counterparts.

• A higher mean investment amount was observed for male and female entrepreneurs with technical backgrounds than for entrepreneurs with non-technical backgrounds. Also, men with technical degrees are awarded the most venture capital.

• A close connection to a VC is more important for women than for men entrepreneurs.

Overall, the outcomes discover that technical expertise is a significant advantage for female entrepreneurs seeking venture capital but not for male entrepreneurs.

Takeaways

The study findings suggest that encouraging technical education and expanding women's networks may improve women's success in garnering venture capital. If entrepreneurship is disproportionately suppressed for women, this is detrimental to individual careers and the general economy. We need a better system for collecting qualitative and quantitative data and statistics related to women entrepreneurs (demographic information, barriers to start-up, and growth). The data can help us promote awareness of the role of women entrepreneurs in the economy and help us develop better policy recommendations.

References

Tinkler, Justine E.; Bunker Whittington, Kjersten; Ku, Manwai C.; Davies, Andrea Rees (2015). Gender and venture capital decision-making: The effects of technical background and social capital on entrepreneurial evaluations. Social Science Research, 51(), 1–16. doi:10.1016/j.ssresearch.2014.12.008