Asking Better Questions : The Effect of Changing Investment Organizations’ Evaluation Practices on Gender Disparities in Funding Innovation

Miller, A., Lall, S. A. , Goldstein, M. and Montalvao, J. (2023) Asking Better Questions : The Effect of Changing Investment Organizations’ Evaluation Practices on Gender Disparities in Funding Innovation. Working Paper. World Bank Group, Washington, D.C.. (doi: 10.1596/1813-9450-10625).

Abstract

Female innovators raise fewer resources from investors, even when their ventures are similar to those of all-male teams. Efforts to mitigate the disparities have typically focused on changing how founders seek investment. However, the causes of gender disparities are systemic: in uncertain contexts, evaluators value women’s competence or leadership potential lower than men’s, and investors inquire more about risks when facing female founders than males. What is the effect of investment organizations’ evaluation practices on gender disparities in funding innovation? This paper examines a two-stage global field experiment with investors making 1,871 investment decisions on early-stage startups, which resulted in $320,000 invested in 16 startups. The experiment changed an organization’s evaluation framework to systematize investor inquiry across all ventures by including prompts about (1) risk and reward and (2) progress during the evaluation period. This caused treated investors to (1) assess startups more consistently and (2) assess startup competence more dynamically than control investors. It eliminated, even reversed, the gender gap in investment outcomes. These results have implications for organizations making decisions in uncertain contexts, and those aiming to reduce gender disparities.

• Item Type: Research Reports or Papers (Working Paper)
• Additional Information: We thank our implementing partner Village Capital. We thank the World Bank Group’s Umbrella Facility for Gender Equality (UFGE) and the We-Fi initiative, as well as ANDE and SGB for funding.
• Status: Published
• Glasgow Author(s) Enlighten ID: Lall, Dr Saurabh
• Authors: Miller, A., Lall, S. A., Goldstein, M., and Montalvao, J.
• College/School: College of Social Sciences > Adam Smith Business School > Management
• Publisher: World Bank Group
• Copyright Holders: Copyright: © World Bank, Washington, DC.
• First Published: First published in Policy Research Working Papers: WPS10625
• Publisher Policy: Reproduced under a Creative Commons licence

Related URLs

• Publisher