A meta-analysis of the gender gap(s) in venture funding: Funder- and entrepreneur-driven perspectives

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Abstract

Using gender homophily and gender socialization as theoretical foundations, the current study takes the position that both funder-driven (supply-side) and entrepreneur-driven (demand-side) processes perpetuate the gender gap in venture funding. Using this positional anchor, I performed a meta-analysis on gender-funding associations. The results show that gender-funding associations are different across funding contexts, which is consistent with what gender homophily and a funder-driven perspective might suggest. However, the nature of the difference depends on whether the outcome is funding amount or funding success. In addition, business size and industry sector were found to fully mediate the relation between entrepreneur gender and funding needed. This finding is consistent with what gender socialization and an entrepreneur-driven perspective might suggest. The mediation results ultimately suggest that female entrepreneurs need less funding for their ventures, which in turn results in less funding amounts but greater funding success. As such, there is one gender gap to the disadvantage of female entrepreneurs (funding amount) and another gender gap to the advantage of female entrepreneurs (funding success). Together, the perspectives and findings presented in this paper provide insights for both research and practice on the gender gap(s) in venture funding.

Introduction

The association between entrepreneur gender and venture funding has been examined from various disciplinary perspectives, including entrepreneurship, management, finance, and economics. Because of this dispersion, scholars, entrepreneurs, and policy makers alike may have different viewpoints on the gender gap in venture funding. Even within disciplines, the findings are mixed, which may cause even more confusion on what the empirical evidence suggests (Miao et al., 2017). For example, research on traditional funding sources (banks; VCs; angels) has documented that female entrepreneurs face greater challenges than male entrepreneurs do when seeking funding for their ventures (Greene et al., 2001; Haines et al., 1999). However, research in this area has noted that the findings are inconsistent (Alsos et al., 2006) and that business characteristics are the primary driver of funding outcomes (Becker-Blease and Sohl, 2007). Moreover, research on nontraditional funding sources (crowdfunding) has shown that gender differences may be to the advantage of female entrepreneurs (Johnson et al., 2018). Still, results are mixed, with other research suggesting that gender differences are to the advantage of male entrepreneurs (Geiger and Oranburg, 2018).1

Given the dispersion of gender-funding research and the need for informed conversion for research and practice, the current study undertakes a meta-analysis of empirical research on gender-funding associations. The goal is to provide academics and practitioners with some level of consensus on, and insights into, the nature and source of gender differences in funding outcomes. Fig. 1 displays the primary associations of interest.

Section snippets

Theoretical context

The current study takes the position that both funder-driven (supply-side) and entrepreneur-driven (demand-side) perspectives provide meaningful insights into the gender gap in venture funding. A funder-driven perspective is explored using a meta-analytic moderation analysis (a contextual exploration). An entrepreneur-driven perspective is explored using a meta-analytic mediation analysis (a “black box” exploration). With respect to theory, gender homophily is used to anchor the funder-driven

Literature search, filtering, and inclusion criteria

I used Google Scholar in the first literature search to locate published and unpublished studies for the meta-analysis. The term gender was used in combination with funding, finance, loans, debt, equity, and crowdfunding when performing the search. Searches were conducted without specifying an outlet and within specific journals that were likely to have empirical studies for the meta-analysis (Journal of Business Venturing; Entrepreneurship Theory and Practice; Journal of Small Business

Moderator analysis using metafor

The metafor package (Viechtbauer, 2010) in the R statistical platform was used to examine associations related to Exploratory Hypothesis 1. The metafor package is a useful tool for moderator analysis and has been used for examining employee-organization relations (Eisenberger et al., 2019), the effects of HARKing on organizational research (Bosco et al., 2016), and the effects of therapy on cancer patients (Scott et al., 2018; Vora et al., 2016). Indeed, metafor has been a useful tool to

Mediation analysis using metaSEM

Meta-analytic structural equation modeling (MASEM) was used to examine Exploratory Hypothesis 2. This methodology combines traditional meta-analytic procedures with SEM and is particularly useful when exploring the “black box” between variables (Bergh et al., 2016). MASEM has been used in research on turnover (Jiang et al., 2012), employee behavior (Zhao et al., 2007), and firm performance (Bergh et al., 2016).3

Discussion

The findings demonstrate a gender gap in funding amount to the disadvantage of female entrepreneurs across most funding contexts. However, there are some indications of a gender gap in funding success to the advantage of female entrepreneurs. For example, the metafor results suggest that female entrepreneurs are more successful in donation crowdfunding contexts. Moreover, the metaSEM analyses suggest that female entrepreneurs need less funding for their business, which is fully mediated by the

Conclusion

To conclude, the perspectives and findings in this paper suggest that both funder-driven (supply-side) and entrepreneur-driven (demand-side) mechanisms play a role in creating the gender gap(s) in venture funding. I hope the insights presented provide motivation for more research and informed discussion on the gender gap(s) in venture funding.

Author statement

Mark Geiger: Conceptualization, Methodology, Software, Validation, Formal Analysis, Investigation, Data Curation, Writing - Original Draft, Writing - Review & Editing, Visualization, and Project administration.

Declaration of competing interest

The author of “A meta-analysis of the gender gap(s) in venture funding: Funder- and entrepreneur-driven perspectives” certifies that there is no conflict of interest to declare.

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    Indicates a study used in metafor moderator analysis displayed in Table 2.

    Indicates a study used in metaSEM mediator analysis displayed in Tables 3 and 4.

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