Women Investors More Likely To Take Risks Than Originally Thought

Here’s an interesting tidbit on investor behavior courtesy of the University of New Hampshire’s Center for Venture Research:  Apparently, women angel investors are less likely to act like women investors when they’re working with more women.

Kevin McShane

New research from the UNH paints a complex picture of women venture capitalists.

In other words, women are more likely to live up to the stereotype of the cautious female investor when they’re not well-represented in the angel group.  And in turn, the whole group tends to be more cautious.  But when you add more women to the group, the female investors are willing to take more risks, and there’s suddenly more capital in play.

The UNH press release explains it this way:

“The reason for this behavior appears to be based on ‘stereotype threat.’ According to this psychological theory, when a stereotype exists about a person, that person will behave in a manner consistent with that stereotype when they are in a situation that highlights, or accentuates, this aspect of their status, whether that is gender, race or ethnicity.

‘In the context of this research, this means that when there are few women in an angel group, the stereotype of cautious investing is accentuated. As the number of women increases, there is less of a stereotype -– there are more women so they are more recognized for their ability as investors and less because of their gender,’ [UNH Center for Venture Research Director Jeffrey] Sohl said.”

The conclusion Sohl and other researchers drew from the research is that with their increased willingness to take risks, everyone’s better off with more groups of women angel investors in the market pumping capital into startup ventures.