Can Female Venture Capitalists Improve the Investment Success Rate of Venture Capital Firms? Evidence from China

Abstract

Gender inequalities are widespread in the labor market, especially in the venture capital (VC) industry. Women are expected to balance work and family, and are left with limited energy to be competent in a high-intensity work environment, such as venture capital firms. However, the multiple roles women play help improve their multitasking ability, which makes female venture capitalists (VCs) more patient and they tend to have a stronger resolve when faced with difficult tasks. This study investigates the role of gender diversity and female VCs in the venture capital industry. Using a sample of 503 Chinese venture capital firms, we find that female venture capitalists can significantly increase the rate of successful investments owing to their investment experience in the industry. This effect is more significant for independent venture capital firms. Female VCs affect investment success rates by changing the preferences of venture capital firms. In areas with a better institutional environment, they have a slightly greater impact on investment performance. The results suggest that women have a positive impact on the course of venture capital investment, and that they make a distinct contribution to investment behavior and success rate.

Keywords

• venture capital
• investments
• female executive
• financial markets