Investors have concentrated their investments in startups led by white, male founders. This situation is problematic for both talented, underrepresented founders and investors who aim to invest in valuable opportunities. Scholars have theorized two main mechanisms for this concentration: homophilous networks and investor heuristics. Some scholars have suggested that underrepresented founders can present different information to investors to foster more objective evaluation. However, changing the information investors have access to is not sufficient to examine all potential mechanisms for the concentration of investments into homophilous founders. How evaluators assess shapes evaluation outcomes in other fields, and examining evaluation practices could provide novel insight into the question of how to foster the objective evaluation of novel ideas. Drawing from interviews with investors and three field experiments, I theorize and test the effect of three specific organizational-level evaluation practices on objective evaluation — where equally qualified startups led by similarly qualified male and female founders receive equal real-world outcomes. I provide evidence that changing organizations’ evaluation practices can foster more objective evaluation. My preliminary results suggest that investors may not be overtly biased, yet still undervalue startups led by underrepresented founders due to their evaluation practices — how they evaluate startups at specific stages of the evaluation process. I discuss the implications of this novel mechanism for organizational theory — on how non-hierarchical systems and processes can be designed to cultivate diversity and inclusion — and the growing entrepreneurship and innovation literature on fostering innovator diversity.
This event is open to faculty, doctoral students, academic researchers, and graduate students.