Gender Effects in Venture Capital

We explore gender differences in performance in a comprehensive sample of venture capital investments in the United States. We find that female venture capitalists significantly underperform their male colleagues controlling for personal characteristics including employment and educational history as well as the characteristics of the portfolio companies in which they invest. When we examine their performance differences, we find that the difference results from a lack of contribution by the male colleagues within their firms. We explore the mechanism for this lack of contribution from male colleagues in a large sample survey of female venture capitalists and in detailed one-on-one interviews. We find support for the notion that formal feedback mechanisms and hierarchies are useful in ameliorating the female performance gap. Female venture capitalists find gender bias in informal mentoring systems as well as in the attitude of entrepreneurs.