We all know that women get precious little venture capital funding: Only three percent of venture capital goes to female CEOs, according to Babson College. And that might be because so few women become venture capitalists: Only six percent of investing partners are women, also according to Babson.

Now, here's the twist. New research published in the Harvard Business Review shows that if you're a woman starting a company, you and your startup may be better off without all those guys. In fact, writes Sahil Raina, an assistant professor of finance at the Alberta School of Business who did the research, women entrepreneurs are much more likely to achieve successful exits if their investors are other women.

Raina used Crunchbase to compare startups that were female-led with those that were male-led, and then to look at the gender of their backers. Overall, he found that female-led startups were less likely to achieve a successful exit than male-led startups. About 17 percent of female-led venture-backed startups had a successful exit (in the form of an acquisition or an initial public offering), compared with 27 percent of male-led startups.

That in itself is interesting, since other studies have found that women-led companies perform better than those whose leadership is all-male. The finding also doesn't bode well for women-led companies, as it seems to validate venture capitalists' reluctance to invest in them. But Raina notes that the difference in performance completely disappeared when he took into account the gender of the people who invested in the company. When women were financially backed by other women, they, and their companies, performed exactly as well as the guys. That's right: All those big-shot male VCs, when they actually do manage to invest in women, are doing nothing to further their success.

It's Not Just About The Money

Raina says this state of the affairs is due mostly to venture investors' ability--or lack thereof--to evaluate the opportunity that a company is tackling in its earliest stages. It might be tough for men to understand what makes an idea or product that is aimed at women particularly compelling. He says the influence of an investor's gender on the performance of a company seems to be the strongest in earlier funding rounds. And he worries that male venture capitalists who erroneously decide a female-led company has little to no chance of success might needlessly discourage female entrepreneurs who might actually have a decent shot at success.

I'm not sure how encouraging these findings are to women entrepreneurs. On the one hand, women who are leading startups, and constantly being told by men that they have no chance of success, just got a nice shot in the arm. These women may or may not go on to conquer the world, but male investors who tell them it's impossible don't seem to have any better judgment on this than anyone else.

On the other hand, there are just not that many female investors, especially in the venture capital world. The numbers are better in the world of angel finance, where about 22 percent of investors are female. And a study by Alicia Robb found that women actually have a better chance of getting fully funded on Kickstarter than men do--in part because women investors on Kickstarter are actively funding other women. Given these new stats, it'll be interesting to see if more women in venture capital look to do the same.

Published on: Jul 19, 2016