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Some VC dads may owe their success to raising daughters
A well-known fact about the venture capital industry is the notorious underrepresentation of women partners in the firms. That could change, suggests research presented in the NBER working paper And the Children Shall Lead: Gender Diversity and Performance in Venture Capital if male VC partners spend more quality time with their daughters. Deborah Krueze writes in her NBER Digest article that the authors of the research, Paul A. Gompers and Sophie Q. Wang, suggest that the proportion of daughters among a VC senior partner’s offspring is correlated with their firms hiring more women VC partners. Firms whose partners had more daughters also performed better than their competitors, the research finds.
Krueze writes, “At firms whose senior partners had more daughters than sons, the female hiring rate was 11.87 percent; the rate was 9.78 percent at firms where senior partners had equal numbers of daughters and sons, and 8.68 percent where they had more sons than daughters.”
On the earnings front, Krueze summarizes the research by explaining, “For all VC firms in the researchers' sample, the probability that a deal resulted in an IPO or in an acquisition valued higher than the amount of capital invested was 28.7 percent. When a senior partner had one more daughter and one less son, a firm's deal success rate increased by about 2.9 percent. This ‘son for daughter swap’ was also associated with a 3.2 percent higher net internal rate of return for the firm.”
VC dads of sons may want to think about what’s in their firms’ investment portfolios with regard to their sons’ futures. A separate working paper discussed in the same NBER Digest suggests improvements in video games and recreational computing since 2004 explains “half the increase in leisure for younger men, and could explain a decline in work hours of 1.5 to 3.0 percent, or 30 to 60 hours per year.” The research also noted 35 percent of younger men (those aged 21-30) lived with a close relative in 2015, up from 23 percent in 2000.