Wharton management professor Tyler Wry is always impressed by the young women in his entrepreneurship classes.
Starting a business is tough, but women founders face gender-based barriers that make it even tougher. They receive only about 2% of venture capital funding, which reduces their chances of success. Yet the women at Wharton persist.
“They are awesome,” Wry said, proudly. “They have great ideas, they have confidence, they are gritty and ambitious.”
Those students have inspired his latest research query into whether universities — with their intensive training, resources, and support for potential entrepreneurs — are helping to close the gender gap for female entrepreneurs.
Unfortunately, Wry said, the answer is no. He and his co-authors analyzed 26,000 ventures launched by university students and recent graduates, and they found that male entrepreneurs are still more than 70% likely than women to obtain funding.
“We were hoping that with a robust ecosystem and the same access for male and female students, you’d see the gap close,” Wry said. “We were disheartened to see that the gap still shows up strongly even when you look at universities.”
The report, “Do Universities Close the Gender-Funding Gap in Entrepreneurship,” was published by the Wharton Impact Investing Research Lab in partnership with The Bright Initiative, which supplied the publicly available data. The co-authors are Tiffany Yau, doctoral candidate at the University of Southern California’s Marshall School of Business, and Chris Bruno, doctoral candidate in management at Wharton.
“We were hoping that with a robust ecosystem and the same access for male and female students, you’d see the gap close.”— Tyler Wry
Stepping Into the Gap
Wry, who is faculty co-director of the research lab, said there were many reasons to think that the study’s outcome would be different. Universities are hotbeds of innovation and venture creation, they offer resources and networking in equal measure to male and female students, entrepreneurship is being integrated into female-dominated majors such as education and health care, and the number of women in business schools are now nearly equal to men. Yet the study found that 1 in 25 women-led ventures get funding, compared with 1 in 15 led by men. The numbers are slightly better at elite schools such as Wharton, but worse at large public universities. For those schools, 1 in 35 women-led ventures get funding, compared to 1 in 15 led by men.
“I think it’s absolutely atrocious that there are these discrepancies,” Wry said. “Entrepreneurship has forever been a bastion of white men. It’s fundamentally unfair. From a societal perspective, if you only have ventures founded by men getting funded, you’re losing out on great ideas that generate wealth for the economy as well as positive impacts for communities.”
While there have been gains, he said, women are still dealing with systemic inequities. And that takes a long time to change.
“There are a lot of people who are advantaged by the system the way it is,” he said. Wry also noted that studies have shown how some women can internalize societal and cultural biases, “so they don’t look for funding as much as men do, they don’t promote it with as much bombast.”
There is some good news in the report: Women-led startups coming out of universities are attracting more capital than those emerging from the general population. In that context, the 2% figure rises to 8%. But Wry cautions not to read too much into the metric.
“This is a bit misleading because that’s all types of ventures, and a majority won’t be interesting to VCs, full stop,” he said. “It’s encouraging, but it’s not the level playing field we were hoping to find.”
“I think it’s absolutely atrocious that there are these discrepancies.”— Tyler Wry
Can Universities Do More for Women Entrepreneurs?
Wry praised the changes that academic institutions have implemented in recent years to boost women entrepreneurs, but he said it’s not a case of “if you build it, they will come.” In the paper, the authors said schools need to be more intentional and active about reaching out to women and encouraging them to pursue entrepreneurship. They need to build stronger networks of women alumni who can mentor female students and show them what is possible. And they need to promote business and STEM majors to girls at a younger age.
“Most of the ventures that attract VC come out of the STEM field, so if you’re looking at the stuff that attracts big money, it’s going to be deep tech, hard tech, and AI,” Wry said. “If you don’t have women in these majors and have the training, they aren’t going to be as represented in VC.”
Wry said that if he were to repeat the study in 10 years, he would like to see the gap closed “across the board” and not just at elite schools. He’s optimistic about targeted efforts such as gender-lens investing and getting more women into partnership positions at venture capital firms, where they may be more likely to consider pitches from female founders.
“Change is probably going to be slow, but there are things pushing in the right direction,” he said.
Meanwhile, the professor wants to replicate the study to examine the intersection of race, gender, and capital. Funding for minority women in the U.S. is fractional. “That’s another area where universities have a role to close these gaps,” he said.
