The relative effect of having one more daughter for all senior partners increased the probability of hiring a woman by 5.1%.These effects were primarily driven by the gender of senior partners’ children in a sample of 1,310 venture capital partners at 301 firms. Venture capital firms where partners had a higher relative fraction of daughters were more likely to hire female partners, and this gender diversity improved the performance of deals and funds.

In this study, due to the fact that the gender of partners’ children is exogenous (not influenced by the partners’ gender biases), the authors were able to establish a causal positive effect of the increase in female hires on venture capital firms’ deal and fund performance. Previous, generally correlational, studies have mostly not been able to establish a causal link between gender diversity and financial outcomes. This paper also contributes new causal evidence to suggest that increases in gender diversity lead to better business performance. This paper explores the effect of having daughters on venture capital firm partners’ decisions to hire female partners. Previous research, such as evidence on the effect of having a daughter on the votes of judges in the United States Courts of Appeals, suggests that parents of daughters are more likely to support gender equity.

This gender gap reflects venture capitalists’ preference for hiring people similar to themselves, with male partners favoring male applicants.

Small teams tend to be more susceptible to bias – and 75% of venture capital firms have never hired a female senior investment professional. These firms focus investment on early stage companies with high growth potential and are typically led by a handful of partners, who determine their firms’ infrequent senior hires. For the past 25 years, the percentage of women in venture capital firms has remained at around 10%, lagging behind other highly compensated fields like medicine or law.

Venture capital fund performance