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Investors in tech start-ups do not trust female founders

Asian female founder of start-up shaking investors hand

ARTICLE SUMMARY

Research, conducted by Vienna University of Economics and Business (WU), found that there is a lack of female founders in IT driven start-ups, due to a perception that tech start-ups are founded by someone that is young, white and male.

This effect plays a huge role in tech-driven start-ups, as their business models are seen to have more uncertainties than those in other industries.

Therefore investors look for ways to compensate for the uncertainty – by going for start-ups with male founders.

Male founders are seen to be less uncertain than their female counterparts. This is because they fit into this stereotype of what not only a tech start-up should be, but any start-up.

The study also found that education or support programs for women are not the solution.

This is because the basic problem does not lie in education and training. Instead it is believed that it can be traced back to female founders deviating too much from the stereotype.

The study was published in the Journal of Information Systems. Speaking about the findings, Sonja Sperber, the Department of Strategy and Innovation at WU, said, “Even though the “distinctiveness” of female founders is important for investors, it does not play a crucial role.”

“While female founders need to be as different as possible in order to stand out from the competition, the study suggests that being female already deviates too much from the normative standard.”

“As a result, female founders are not able to prove themselves in the first place. They are simply denied the chance, or the investors’ funding, to do so, regardless of their education or experience.”

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