Women Entrepreneurs Are More Likely to Get Funding If They Emphasize Their Social Mission

Over the last decade, new ventures across industries have framed their businesses in terms of social impact. We observed that a disproportionately high number of ventures that emphasize social impact seem to be founded by women. This could be because female founders are more likely to care about social issues than men. But we also wondered if something else might be going on: perhaps the women who started social enterprises were more likely to get funding than women who started traditional businesses.

In our forthcoming article “Gender Bias, Social Impact Framing, and Evaluation of Entrepreneurial Ventures”, published in Organization Science, we find that for women entrepreneurs founding their own companies highlighting the social impact of their ventures leads to more positive perceptions. In short, social impact framing reduces the discriminatory effects of gender bias.

To explore this idea, we carried out two studies. In the first, we partnered with an entrepreneurship incubator that supports businesses with a social mission to study real-life venture evaluations made by potential funders and other supporters. Because all founders had a social mission, they had a choice about whether to emphasize their social impact in presenting their venture. Some devoted more than a quarter of their business plan to the venture’s social impact, while others barely mentioned it at all.

Across 43 ventures and 421 evaluations, we found that on average, female-led ventures were perceived as less viable than male-led ventures. However, female-led ventures that more heavily emphasized their social impact managed to avoid this gender penalty. (Male-led ventures were unaffected.) These patterns were the same regardless of whether evaluators were male or female.

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