Venture Investors Prefer Funding Handsome Men
Studies by Alison Wood Brooks and colleagues reveal that investors prefer pitches from male entrepreneurs over those from female entrepreneurs, even when the content of the pitches is identical. And handsome men fare best of all.
If you're in search of startup funding, it pays to be a good-looking guy.
A series of three studies reveals that investors prefer pitches from male entrepreneurs over those from female entrepreneurs, even when the content of the pitches is identical. Attractive men are the most persuasive pitchers of all, the studies show.
The findings are detailed in the paper Investors Prefer Entrepreneurial Ventures Pitched by Attractive Men, published in the March 2014 Proceedings of the National Academy of Sciences.
"Our paper provides concrete proof that gender discrimination exists in the context of entrepreneurial pitching," says Alison Wood Brooks, an assistant professor at Harvard Business School who coauthored the paper with Laura Huang, an assistant professor at the Wharton School of the University of Pennsylvania; Sarah Wood Kearney, a visiting scholar at the MIT Sloan School of Management; and Fiona E. Murray, associate dean of innovation at Sloan and Kearney's thesis adviser.
"Our paper provides concrete proof that gender discrimination exists in the context of entrepreneurial pitching"
As a behavioral psychologist, Brooks studies the situational variables that influence personal persuasion. Kearney, her twin sister, is an entrepreneur and scholar whose research is fueled by both a frustration with and curiosity about the dearth of venture capital for women. (In the first half of 2013, companies with at least one female founder secured some 13 percent of total venture funding, up from 4 percent in 2004, according to data from PitchBook.) Murray is Kearney's thesis adviser. Huang, whom Brooks met in the initial stages of their research, studies the role of "gut feel" in investment decisions.
THE GUYS HAVE IT
In their first study, the research team examined video recordings of 90 randomly selected pitches from three real-life entrepreneurial pitch competitions, held in various United States locations over a three-year period. In each case, a panel of angel investors had judged the pitches and awarded startup capital to the winners.
The researchers recruited a separate panel of 60 seasoned angel investors to watch the videos and code them across several measures, including physical attractiveness—rating the entrepreneurs on a scale of 1 (very unattractive) to 7 (very attractive). The coders were blind to the actual competition results.
The analysis showed a significant relationship between an entrepreneur's gender and whether a pitch had been successful. Male entrepreneurs were 60 percent likelier to receive a funding prize than were female entrepreneurs. Among those male entrepreneurs, investor-deemed attractiveness led to a 36 percent increase in pitch success. But for female entrepreneurs, their looks had no apparent effect on the success of their pitches.
The second study was an experiment designed to isolate the effect of gender on pitch persuasiveness. The researchers used 521 participants to watch two entrepreneurial pitch videos online. In each case, one of the pitches had won funding in real life. Participants in the experiment, roughly half of whom were women, were tasked with guessing the actual winner, with the incentive of a monetary reward for a correct guess.
The pitches included still images and a voiceover narration by the entrepreneur. This format enabled the researchers to assign a gender to the entrepreneur—dubbing in a male voice for some videos and a female voice for others, while the content of the narrations remained identical.
All else being equal, 68.33 percent of participants favored ventures pitched by male voices, while only 31.67 percent chose female-voiced pitches. Importantly, the gender effect held steady regardless of the "investor's" gender.
"We saw the same discriminatory effects between male and female participants," Brooks says.
In the third study, 194 participants each watched only one pitch video. As in the previous study, the researchers manipulated the gender of the voiceover each time. Additionally, they accompanied each video with a photo, which varied according to a scientific scale of physical attractiveness. "We manipulated attractiveness using four faces: one high-attractiveness and one low-attractiveness female face, and one high-attractiveness and one low-attractiveness male face," Brooks explains. "We used photos that had been used in previous research and validated as highly attractive or unattractive, and we also ran our own pilot study to ensure that the faces uniquely manipulated attractiveness."
Each participant rated the investment potential of the venture on a scale of one to seven. As with the previous studies, participants awarded higher ratings to pitches with male voices—deeming the male pitches more "persuasive," "fact-based," and "logical" than otherwise identical female pitches. Additionally, the participants preferred pitches from the "high-attractiveness" male entrepreneurs over those from "low-attractiveness" men. But looks had no significant effect on whether female-voiced entrepreneurs fared well.
NEXT STEPS AND LESSONS LEARNED
In the secondary stages of their exploration, the researchers plan to dive deeper into gender dynamics. Among the questions they are pursuing: What happens when the female entrepreneur is perceived as stereotypically masculine vs. feminine? Is a female entrepreneur more likely to be funded if her business targets female customers? Will a successful track record increase a woman's chances of securing capital?
Brooks is hardly shocked by the results of the studies thus far. "I was surprised to find the effects consistently across both field and lab settings," she says. "But, in general, I find our results to be more sad than surprising."
Still, she's hopeful that the research provides a wake-up call to the venture capital industry.
"Awareness is a critical first step," Brooks says. "Though gender in entrepreneurship has become a hot topic (Sheryl Sandberg's wonderful Lean In and Ban Bossy campaigns, for example), we haven't seen much concrete data on the topic until now. We hope this research leads investors and entrepreneurs to become more supportive of male and female entrepreneurs alike."