Startups led by women are more likely to advance—but less likely to go all the way

In an American pitch competition, startups led by women had an edge in the initial selection round. In the finals, the trend reversed. This is shown by a new study published in the top-ranked scientific journal *Administrative Science Quarterly*.

For a startup, it’s not enough to convince people just once. First, the company has to make it through an initial screening, then pass the next review. And finally, it has to get someone to actually invest money.

The researchers behind the study tracked nearly 3,000 startups that participated in a pitch competition organized by a national U.S. accelerator. The companies were evaluated based on the same criteria and using the same pitch format throughout the competition. The judges rotated between rounds and were not allowed to see the evaluations from previous rounds. One key difference between the competition rounds was what was at stake.

The lead disappeared

In the first round of the competition, startups led by women advanced more often, relatively speaking, than those led by men. In the next round, however, there was no statistically significant difference between the groups.

Then came the finals. Among the finalists, the probability of being named the winner was nearly 19 percentage points lower for companies led by women.

This is despite the fact that companies led by women had received higher quality ratings in the first round. According to the researchers, one possible explanation is that women who make it this far may have already had to overcome more obstacles before the competition and were therefore more rigorously screened from the start.

Even the startups led by women that were among the winning companies received, on average, less funding.

If the researchers had studied only the first sample, the picture would have looked one way. If they had looked only at the final round, it would have been the opposite.

When a “yes” becomes harder to take back

The researchers describe a pattern in which gender differences shift as the stakes get higher. Early in the process, decisions are preliminary. A startup that moves on may be reviewed again and eliminated later.

In the final round, the commitment becomes significantly more binding. Prize money will be distributed, and the winners will be publicly highlighted in the accelerator’s communications to other investors and stakeholders. It becomes harder to take back a “yes.”

The results from the final are consistent with the idea that expectations of future performance and a greater aversion to risk may become more significant when more is at stake. However, the study cannot conclusively determine that it is precisely these mechanisms that cause the difference.

The entire chain needs to be examined

The researchers point out that the study focuses on a single accelerator and that the results therefore cannot be readily applied to all investments or other selection processes.

At the same time, they emphasize the importance of reviewing every step of the process.

Only when the entire process is followed is it possible to see how gender disparities change—from which applicants are selected to move on to which ones ultimately receive funding and are named winners.

More about the article and the authors
The article “Getting in the Door vs. Winning It All: How Gendered Outcomes Change Across Evaluation Stages in Entrepreneurship” (free to download) has been published in the academic journal Administrative Science Quarterly.

The authors are Tristan L. Botelho, Yale University, USA, and Ethan J. Poskanzer, University of Colorado Boulder, USA.