More daughters, more money: Harvard researchers’ tips for venture capitalists
Venture capital firms whose partners have more girls tend to outperform their competitors, hiring more women and making more money, according to a new academic study.
In a review of rare gender diversity results in the form of a benefit, researchers at Harvard University said that other girls encouraged leaders to hire more women, in turn, “improve a performance of operations and money “.
His work was published by the influential National Bureau of Economic Research, a non-profit research organisation based in Cambridge, Massachusetts.
Venture capital has long been a world dominated by men, three-quarters of companies that do not have high-level investors, according to previous research cited in the study.
But increasing gender diversity could be a recipe for greater profitability, wrote business professor Paul Gompers and researcher Sophie Wang in the study co-author.
Venture capital companies are often pocket-sized enterprises, small businesses that are committed to the start-up success of investing millions in exchange for participation and hope for high performance.
According to the study, companies increased their gender diversity hiring more women saw their success rate to increase by almost 3%. Profitability, as measured by the domestic rate of return, increased by more than 3%.
University based their findings on 12,000 venture capital investments made between 1990 and 2016, primarily by US companies.
They also studied the personal information obtained from 1400 investment partners. Mathematical models have shown that the probability of hiring a high-level investor has increased by 25% when a child has been replaced by a girl among the partners of a company.
The authors have made investments that led to an initial public offering of the company or when the company was acquired for more money than expected.
The study, released Monday, adds weight to business arguments for gender diversity, they said.
“While diversity has been hailed as an important pillar of modern civil society and the contemporary work environment, there are few rigorous studies, in our view, that estimate the causal economic impact of a varied work task in a real business environment, “They wrote.
Beyond the data, it was not clear why partners with more girls have improved the performance of venture capital firms, they said.
The authors wrote that partners raising girls may feel less tense against women and therefore hire more. Female couples, by their origin, could also open the door to more business opportunities.