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All Tech Considered
Sat March 22, 2014
Need Money For Your Startup? Being An Attractive Male May Help
Originally published on Sat March 22, 2014 7:47 pm
Google. Twitter. Facebook. Back before they got big, companies like these were just startup ideas, born in dorm rooms and run out of garages. Then came the venture capitalists: rich, older men ready to fund the brilliant ideas of younger, creative men.
But what if you are a woman with a startup idea? A new study says you might not do so well. It's been well-documented that businesses started by women receive very little venture capital money.
"Women-led businesses probably only receive between 5 and 10 percent of all the venture capital that's allocated to startups in their very earliest in their growth phases," says Fiona Murray, who researches business innovation at Massachusetts Institute of Technology.
Murray partnered up with colleagues at Harvard Business School to find out why the funding gap existed.
There were a couple hypotheses: Perhaps women are just not asking for funding, or perhaps women's business ideas don't have as much growth potential. Or maybe venture capitalists are subconsciously biased against women. The study was designed to test that third hypothesis, that women get less funding because society thinks they are worse investments.
The study used real startup pitches from real companies. Each pitch was presented in four ways to observe the effects of gender and attractiveness. It would be given in a male voice, with a photo of an attractive and less attractive person of that sex; and it was also presented in a female voice, with pictures of two women of different levels of attractiveness.
They asked venture capitalists of both genders to decide whether the pitch was convincing and whether they would invest in it.
The results were emphatic. Investors chose the businesses presented by males 68 percent of the time. "We found that individuals, both male and female, respond much more positively to pitches with male voices than a pitch with a female voice," says Murray. "There's a quite strong gender gap in how people find these pitches convincing."
What's more, they found the attractiveness of the male entrepreneur affected his success.
"There's a very positive attractive-man effect," says Murray. "People are most likely to find a pitch with a male voice with an image of an attractive man more appealing, more investable than a pitch by a less attractive man or woman. And the group that fares most poorly are actually the attractive women."
That bias held true even when women were the ones deciding whether to invest.
Murray says these results are important to understanding our own biases.
"I think the attractiveness piece speaks to some of the biases we have in society about what we think people's appropriate roles are," she says. "So we think that this has something to do with the gender stereotypes and the attractiveness stereotypes that we have out here in society."
ARUN RATH, HOST:
Google, Twitter, Facebook, billion-dollar businesses that started out as just geeky ideas born in dorm rooms and run out of garages. Then came the venture capitalists.
(SOUNDBITE OF MOVIE, "THE SOCIAL NETWORK")
SCOTT LAWRENCE: (As Maurice) You must be Mark.
JESSE EISENBERG: (As Mark Zuckerberg) Hi.
WALLACE LANGHAM: (As Peter Thiel) We took a look at everything, and congratulations. We're going to start you off with a $500,000 investment.
RATH: It looked so easy in "The Social Network," a young man with a brilliant idea needs cash. Other men fork it over. Everyone gets rich. But what if you're a woman with a startup idea? A new study says you might not do so well.
Fiona Murray is one of the authors.
FIONA MURRAY: We certainly know that women entrepreneurs receive less risk capital than their male counterparts. Women-led businesses probably only receive between five and 10 percent of all the venture capital that's allocated to startups in their very earliest in their growth phases.
RATH: And so I suppose you could explain that either by saying maybe there's bias or maybe the pitches from the women are not as good. So it sounds like you sort of set out to peel that apart, right?
MURRAY: That's right. So people have a few explanations for those facts on the ground. So the first explanation is that women are just not asking. So there are not that many women-led businesses that are coming to the venture capital community to really ask for funding and asking for investment. The second explanation that people give is that they come with different sorts of businesses that perhaps don't have the right growth potential. What we wanted to understand is whether or not they were also subconscious biases.
RATH: And can you talk about how you went about studying that, how you went about trying to figure out if there's a bias?
MURRAY: Yeah. So what we did is basically take one pitch, so a video of a pitch of a new business to an investment group. All you could see in the video were the slides and the images. And then we took the script of the pitch and we basically recorded that same pitch script with a male voice and a female voice. And we asked male and female respondents to tell us whether they found the pitch convincing, whether they found it investable and whether they would be likely to invest.
RATH: Gender was not the only distinction that you made. There was also - you categorized for attractive people who were pitching.
MURRAY: That's right. So we were most interested in the gender difference and in the male-female difference, but we also wanted to look at whether or not there were differences in the attractiveness of the people pitching. And so what any given person would see is one of four categories: a male or a female voice and an attractive or less attractive image of that same gendered person.
RATH: So let's talk about the findings, first with gender and then with attractiveness. What did you find out?
MURRAY: So the findings are really perhaps not surprising but also quite interesting. So we certainly found that there was a quite big gender gap. So we found that individuals, male and female, respond much more positively to pitches with male voices than a pitch with a female voice. So there's a quite strong gender gap in how people find these pitches convincing. And then perhaps the more interesting or controversial finding is we find that there's a very positive attractive-man effect.
So people are most likely to find a pitch with a male voice with an image of an attractive man more appealing, more investable than a pitch by a less attractive man or woman. And the group that fares most poorly are actually the attractive women.
RATH: Any idea why that would be?
MURRAY: So this is one of the interesting questions in the study is to really understand where this comes from. I think that certainly with the basic gender difference, we think that this simply confirms what we know from a lot of other areas, which is in places particularly where women are more unusual, where they are the less expected category. Then we find that people respond to the more typical individual, the male in this case, in a more positive way.
I think the attractiveness piece speaks, I think, to some of the biases that we have in society about what we think people's appropriate roles are. So we think that this has something to do with the gender stereotypes and the attractiveness stereotypes that we have out here in society.
RATH: Fiona Murray's latest study is about the gender gap and venture capital funding. Professor Murray, thank you.
MURRAY: Thank you very much. Transcript provided by NPR, Copyright NPR.