Why Female-Backed Female Founders Struggle to Raise More Capital

Dr. Isabelle Solal, Assistant Professor in the Management Department at ESSEC Business School, discusses her research titled “Does Investor Gender Matter for the Success of Female Entrepreneurs? Gender Homophily and the Stigma of Incompetence in Entrepreneurial Finance.” Dr. Isabelle Solal’s research disrupts the belief that venture capital is a pure meritocracy by showing how gendered perceptions shape which ventures get funded and grow. Focusing on the question of whether investor gender affects the success of female entrepreneurs, she finds that female-founded firms backed by female VCs are twice as likely to fail in raising follow-on funding compared to all other founder–investor gender combinations, revealing a specific penalty attached to the female founder–female investor pairing rather than to women founders or women investors on their own. Through a combination of large-sample field data and controlled experiments with MBA students evaluating identical startup pitches, her work demonstrates that observers implicitly downgrade the competence of female founders when their initial backing comes from a female investor, resolving cognitive dissonance by attributing the investment to gender-based favoritism rather than merit and thereby making the opportunity seem less attractive. This competence penalty, she argues, reflects automatic, unconscious bias rather than explicit intent and has broader implications for how women’s same-sex professional ties are perceived across domains like corporate promotions, academic careers, and professional services, underscoring the need for systemic solutions such as mixed-gender investment teams, shared responsibility for diversity work, and a fundamental reframing of gender gaps as a talent and resource allocation problem rather than a “women’s issue”. This podcast is brought to you by Global Management Consultancy. For more information, please visit www.globalmanagementconsultancy.com. Disclaimer: A. The background music incorporated in this video is the intellectual property of its respective developer and is protected under applicable copyright laws. Notwithstanding that it is a free-to-use version, Business Talk, Global Management Consultancy, and Deepak Bhatt do not own, and expressly do not claim, any rights, title, or interest in or to this music. B. Dr. Isabelle Solal shared valuable insights from her research titled “Does Investor Gender Matter for the Success of Female Entrepreneurs? Gender Homophily and the Stigma of Incompetence in Entrepreneurial Finance” during an engaging episode of the Business Talk podcast. The uploaded video contains copyrighted content, so changing any graphics, music, or on-screen appearance of the author or host is not allowed.