Investor’s bias in the funding of women ventures – a qualitative narrative enquiry using LIWC

Abstract

The start-up ecosystem in India is currently the third largest in the world, trailing only behind USA and China. However, there are striking gender differences in the business ownership and funding practices. Only 11% of the Indian start-ups have women founders. Starkly, only 6% of the funding goes to companies with women as a founder or co-founders and for companies with only women founders, the percentage of the total funding drops to 1.5%. This research primarily explored the role investor biases play in explaining the persistence of gender-gap in accessing funds. While the existing research focuses on the notion of deficit in women’s attitude or personality as evidence of gendered disparity in entrepreneurial potential and success, there is little attention on alternate stream of research focussing on investor’s perceptions and prejudices that restrict women’s performance. We focus on the perceptions of venture capitalist, angel funds, and private equity players in the start-up landscape, to understand how their biases towards women entrepreneurs are manifested at the individual and group level, gaining legitimacy and being institutionalized in the long-run. The study is an observational field-based study, focused on the nature of linguistic and psycholinguistic patterns of interactions of investors with men and women founders. Textual analysis (LIWC-22) was used to analyse 42 such conversations, and differences were found in expressed emotion, motivational words, stances and social processes toward men and women founders. Drawing from social-role theory and principles of homophily, we contribute to the literature on systemic patterns of investor bias at the individual and group level towards women-led ventures.