Venture Capital (Still) Has a Gender Problem

A new study sheds some light on why Silicon Valley is still dominated by men.

Graduates from the Harvard Business School MBA program (Neal Hamberg/Bloomberg)

Graduates from the Harvard Business School MBA program

(Neal Hamberg/Bloomberg)

Almost half of men are already actively pursuing opportunities as entrepreneurs while they’re still in school pursuing their MBAs — while only 34 percent of women are building businesses out of their proverbial garages as graduate students, according to a study published today by Illuminate Ventures in conjunction with students from Carnegie Mellon’s Tepper School of Business.

Venture capital is famously white and male, even with efforts by the major firms in Silicon Valley to hire more women and fund their start-ups. To find out why, the study’s authors examined MBA students’ views on entrepreneurship, and how female and male MBA candidates differed, if at all, in their concerns about the career path. The report is based on a survey that included 500 responses from 20 MBA programs in the U.S.

There’s no shortage of would-be entrepreneurs overall. More than 85 percent of the MBA respondents were considering a career as an entrepreneur. But the study found substantial differences between men and women when it came to confidence, perceptions of the availability of funding for their ideas, and the possible barriers or advantages for success. The paper also found that the pandemic has increased interest in venture capital and entrepreneurship by both sexes.

More than one-third more male respondents had an idea for a new company, compared with women. Although the survey didn’t find a reason for the difference, the authors cite outside research that attributes the gap to women’s inability to effectively tap into valuable networks of funders and other business executives.

“Structural solutions focused only on providing female students and entrepreneurs more exposure to VCs may not be sufficient to eliminate networking friction,” the authors wrote. “Interestingly, research shows that exposure to VC networks substantially benefitted men, but was minimally helpful for women. There is more work needed to understand this nuance.”


Although interest in entrepreneurship has risen overall since the beginning of the pandemic, women’s ability to find funding actually declined during the same period.

“Unfortunately, Covid seems to be negatively impacting women’s access to capital more so than men,” according to the study. In fact, private markets research firm Pitchbook found that in the third quarter of 2020, venture capital investments in companies led by women were at the lowest level since 2017.

[II Deep Dive: How Covid-19 Exacerbated Finance’s Gender Gap]

Students who were not interested in entrepreneurship listed their top concern as a lack of financial security. Men chose financial security as their number one concern, while it was number two for women.

There was a wide divergence between men and women when it came to other reasons for not pursuing start-ups as a career. For example, women’s number one concern was funding for a new venture. Men ranked that far lower, at number four. Women ranked self-confidence as number three. For men, that was last on the list at number 6.

“This result suggests that the historical findings of a plethora of research papers showing that males tend to overestimate their own capabilities while women do the reverse may still hold true even amongst MBA students in the year 2020,” according to the report.

The report cites a number of recent research studies showing that self confidence is a complicated subject for women that is influenced by ingrained stereotypes and other factors.

“The confidence gap amongst women and other diverse founders in the entrepreneurial ecosystem is likely a myth that is somewhat self-perpetuated,” wrote the report’s authors. “The choice of an entrepreneurial career demonstrates a level of confidence and conviction that exceeds the norm. Given the well-known, but little discussed barriers to success that women and other diverse founders still face, their courage and confidence likely exceeds that of a more typical white male founder.”