While Investments From Top-Tier VCs Drive Startup Media Coverage Regardless of Gender, More Broadly, Having A Female Founder Is Linked To Less Media Attention
4 min read · Dec 2024
Gasiorowski, Laura, and Ahreum Lee
The marginal effect of having one prestigious investor is about 58 [additional media] articles.
Summary
Media attention helps startups improve the level of venture capitalist (VC) funding. But what determines whether a startup receives media attention? This paper uses data from 315 early-stage startups in the US to show that the most important predictor of whether a startup receives media coverage is funding from a top VC firm.
Method
This quantitative study uses the Crunchbase database to source information about 315 early-stage startups in the US software industry, including all articles and press releases that mention them from founding until 2021. The authors examined three key variables to understand the drivers for media coverage: 1) prior entrepreneurial experience, 2) whether there was a female founder, and 3) whether the startup has ever received venture capital funding from one of the top ten VC firms. The paper uses regression techniques to establish these relationships.
Key Findings
Startups with a female founder had fewer articles written about them.
Gender may not directly influence media attention but acts as a proxy for other disparities, such as access to financial, human, and social capital.
While the research indicates that having a “female founder” in the founding team is negatively related to the number of articles written about them, it is only marginally significant, suggesting that gender may be a weak or noisy signal.
Startups with prior entrepreneurial experience had fewer articles written about them.
Startups with founders with prior experience saw an average decrease of 14 articles compared to those with no startup experience.
Prior research shows that media attention helps startups to get more VC funding, and prior experience is a positive factor in VC investment decisions, however, the finding in this research indicates a negative correlation between prior experience and media attention. This implies that prior experience alone might not be a strong enough signal for VC funding. The authors conjecture that it needs to be combined with other factors like affiliations with established institutions to make a difference.
Startups with one prestigious investor increased the number of articles written about them.
The presence of a prestigious investor is associated with an increase of about 58 additional articles on average.
A prestigious investor is the strongest signal impacting media attention. This finding aligns with the idea that a prestigious endorsement is a credible signal to other investors, due to the endorser's reputation and their financial stake.
Takeaways
Networks and visibility are key to a startup’s access to resources, but for many founders, this is a barrier. Founders from underfunded groups often lack access to networks or “buzz” to capture investors' interests. This study shows that the most reliable indicator of media coverage is being funded by a prestigious investor and that having a female founder is associated with less attention.
It is not surprising that startups backed by prominent VC firms are more likely to receive media attention than those that have not received such funding. This suggests that media coverage may be a consequence rather than a cause of VC investment. While media attention can enhance visibility, it may not be a sufficient condition for attracting more investment. Looking for more media coverage is one of many strategies to reach investors.
A more troubling finding emerges when considering gender. While other studies have shown that having a female founder is positively associated with firm performance, these data points are not translating to funding or attention. This research reveals that these businesses are overlooked by the media and, as is well-studied, overlooked by venture capital. The reasons for these disparities should be addressed in future research.
References
Gasiorowski, Laura, and Ahreum Lee. 2022. “Pay Attention to Me! The Role of Endorsements, Patents, Gender and Prior Experience in Startup Media Attention.” Journal of Small Business and Enterprise Development 30(1): 120–43.
About WIN-VC Canada:
New Power Labs is the research lead of the Women and Nonbinary (W) Impact (I) Network (N) for Venture Capital (VC), a national collaborative of organizations working to provide services, programming, events, and dedicated resources to women and non-binary entrepreneurs and gender lens investors across Canada who are working towards becoming investment ready and increasing the pool of investors driven to invest in these ventures.
This research is part of WIN-VC Canada, supported by the Government of Canada. WIN-VC acknowledges the support of Innovation, Science and Economic Development (ISED). ISED has awarded funding for WIN-VC that will make the venture capital environment more inclusive for women by transforming traditional investment processes, processes and knowledge into respectful and meaningful approaches that value equity and impact with a focus on diverse women and non-binary entrepreneurs and SMEs including Black communities, Indigenous peoples, racialized populations, persons with a disability, 2SLGBTQ2+ and new Canadians.
