This study uses unique hand-collected data from a televised entrepreneurial pitch competition to examine gender differences in obtaining angel financing. Results indicate that while the yield rates between male and female teams do not differ, a gender disparity in the amount of angel funding does in fact exist. Female teams receive less capital and provide more equity relative to their male counterparts, even when controlling for typical determinants of investment, such as industry and prior company success. Further, we find that female teams receive investments with lower valuations than their male counterparts largely because they initially offer higher equity stakes for less capital. Thus, this suggests that limitations to angel financing of female entrepreneurial ventures may be partly self-imposed.
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The statistics we provide do not exactly match Coleman and Robb 2009 because we extended the timeframe and calculated overall growth rates that include statistics from the U.S. Census Bureau Survey of Business Owners from 2007 and 2012, as well as 1997 and 2002.
Angel investors invest in small, private firms using their private funds (Wong et al. 2009).
Eight episodes in Season 1 consisted of five separate pitches, as opposed to the standard four pitches.
More details on the selection process for the television program can be found in Appendix A.
This information was taken from publicly available information across several sources on the internet, including LinkedIn reports, as well as Forbes’ list of the wealthiest Americans.
Seventeen percent of the individual teams are women.
This value does not represent the quotient of the accepted dollar amount and the accepted equity amount. This is because the average accepted valuation for each company uses corresponding dollar and equity amounts for each company, while average dollar and average equity are calculated within each separate variable.
The normalized final company valuation and normalized bid-ask spread are equal to the final company valuation divided by the initial company valuation and the bid-ask spread divided by the initial company valuation, respectively.
Results here excluded for brevity and available upon request from corresponding author.
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The authors gratefully acknowledge the research assistance of seven undergraduate research assistants from the Charles H. Dyson School of Applied Economics and Management.
Appendix 1 Details on the television show selection process
Appendix 1 Details on the television show selection process
There are two main ways to apply to be on the show: through an email submission or an open call. The first, an email submission, requires that the entrepreneur email their name, age, contact information, a recent photo of themselves, and a brief non-confidential description of their business, product, or idea to a general casting email. The second option is to attend an open call audition. These auditions are held on numerous dates every season across the USA. During the open call, entrepreneurs are given the opportunity to do a 1-min pitch of their business/product/idea to a member of the casting team. However, the entrepreneurs must have the application packet completed prior to their arrival. The application packet consists of extensive paper work that detail their business/product/idea and financials. All open calls are open to the general public, as long as the entrepreneurs arrive during the allotted 2-h time-slot when numbered wristbands are distributed (ABC 2016). Only the applicants with numbered wristbands are guaranteed to have a chance to pitch, or approximately the first 500 applicants.
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Poczter, S., Shapsis, M. Gender disparity in angel financing. Small Bus Econ 51, 31–55 (2018). https://doi.org/10.1007/s11187-017-9922-2