by Sarah Thébaud and Amanda J. Sharkey

In 2010, the New York Times reported the story of Candace Fleming, a Harvard trained, HP executive who struck out in 2007 to found a new data analytics company. Fleming obtained funding from a venture firm that specializes in women-led companies, but only after being turned down by 30 conventional VCs. During this process, she experienced blatantly gendered comments and criticism. For example, one VC told her it didn’t matter what was on her business card, since all anyone would see is “Mom”. In trying to make sense of the these experiences, she mused, “…in risky times like the last couple years, some investors kind of retreat to investing via a template.” And [a company owned by a woman] “is just not the standard template.”

Is Fleming’s intuition that lenders rely more heavily on gender stereotypes during “risky times” correct? Prior research has offered mixed evidence of gender bias in lenders’ willingness to support entrepreneurs during normal macroeconomic conditions. But various theories do predict that gender bias is more likely to manifest when there is greater uncertainty and when decision-makers’ choices are under greater scrutiny from others—two hallmark features of the lending environment during the economic downturn. In fact, the small business investment market was particularly hard hit by the recession, with total investment contracting 18 percentage points between 2008 and 2011.

In a recent study, we took on this issue by examining data from the Kauffman Firm Survey, a panel study that followed financing strategies and outcomes for a single group of entrepreneurial ventures between 2007 and 2011.

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