Gender diversity, role congruity and the success of VC investments

Building upon the gender role congruity theory, in this paper, we propose that the association between gender diversity and venture performance changes when roles played by individuals are not coherent with the gender-derived expectations of their ascribed social group. We test our theory in the context of early stage financing, investigating how gender diversity between entrepreneurs and VC managers influences the investment performance of VC-backed firms. Our sample consists of 5800 VC managers, who invested in 5075 different ventures in the period 2000–2019 and of 16,713 venture founders. We find that gender diversity is associated with better performance only when a female entrepreneur is matched to a male VC manager. Our analysis sheds light on the presence of several factors that moderate the observed association, related to the VC’s ability to provide value-added services to the invested ventures.