Every year, thousands of technology start-ups are launched with a single distant goal in mind: a payoff moment known as an “exit.” That moment usually takes one of two forms. Either the company goes public through an initial public offering (IPO), meaning it starts selling shares on a stock market, or it gets acquired by a larger company in what’s called a merger or acquisition (M&A). For founders, investors, and employees holding stock options, exits are often where the financial rewards finally materialize.
But not every start-up reaches that milestone, and a new analysis of nearly 3,800 Israeli technology firms suggests that the gender composition of a founding team may be linked to whether a start-up gets there. Published in the Journal of Business Research, the study reports that start-ups with women on their founding teams were less likely to go public or be acquired, but that this pattern shifted substantially when women also held management roles within the company.
The question behind the research
Women remain a small minority of entrepreneurs, even as their numbers grow. In Israel, where the study was conducted, women made up about 5.3% of entrepreneurs in 2010 and roughly 12.1% by 2021. Similar patterns appear across many Western economies.
Eliran Solodoha of the Peres Academic Center, working with colleagues Stav Rosenzweig and Shai Harel at Ben-Gurion University of the Negev and Tel Aviv University, wanted to understand whether this minority status shapes what happens to the firms women help build. Prior research has shown that women entrepreneurs often face different fundraising conditions, receive smaller loans, and navigate social expectations that don’t always line up with stereotypes about what an entrepreneur looks like.
The team drew on a concept called entrepreneurial identity, the idea that people build a sense of who they are as entrepreneurs partly by comparing themselves to others in the field. When entrepreneurship is dominated by men and associated with traits traditionally coded as masculine, women may feel a sense of being different or out of place. That sense of distinctiveness, the researchers propose, can discourage the kinds of behaviors that tend to lead to an exit, specifically, seeking out ambitious opportunities and taking substantial financial risks.
How the study was built
The researchers turned to the Israel Venture Capital (IVC) database, which tracks nearly the entire population of Israeli technology start-ups. They gathered data on 3,743 firms active between 1990 and 2014, following those still operating through the end of 2019. Seven high-tech industries were represented, ranging from life sciences and communications to semiconductors and internet companies.
To identify the gender of founders and managers, the team used an online dictionary of Hebrew names. When a name could belong to either a man or a woman, they checked the company’s website for a photograph. Altogether, the sample included 369 women entrepreneurs, 6,882 men entrepreneurs, 2,034 women managers, and 8,795 men managers.
Because start-ups with and without women founders might differ in many ways that affect their odds of an exit, the researchers used a statistical technique called propensity score matching. This method pairs each start-up in one group with a similar start-up in the other, based on characteristics like the founders’ education, prior experience, the firm’s age, number of employees, financing rounds, investors, industry, and stage of development. The goal is to compare firms that look alike on paper, so any remaining difference is less likely to be explained by those other factors.
They then ran a two-stage statistical model. The first stage estimated the probability that a start-up would survive at all. The second stage estimated the probability that a surviving firm would reach an exit, either through an IPO or an M&A.
What the analysis revealed
The numbers told a consistent story. Start-ups with women on their founding teams were less likely to reach an exit than otherwise similar start-ups without women founders. About 14% of start-ups with no women founders went on to exit, while the share was lower for those with one or two women founders.
But the pattern changed when women also held management roles that were separate from the founding team. In start-ups with two women founders and at least one woman manager, the exit rate rose to about 20%. The researchers’ models showed that the negative association between having women founders and reaching an exit was substantially weakened, and in some cases reversed, when women were present in management positions.
Looking at the two exit types separately, the pattern held for both IPOs and acquisitions. The researchers also tested whether the softening effect might come from simply having more managers of any kind. It did not. Adding men managers to a start-up with women founders did not produce the same shift. The change was specific to women in management roles.
To check whether the results might be an artifact of how they measured things, the researchers also ran the analysis using the share of women among founders and managers, rather than raw counts. The results held.
Interpreting the pattern
The authors connect these findings to their framework about identity. In a setting where women founders stand out as unusual, the researchers argue, their sense of difference may discourage the kinds of bold moves that lead to exits. When women also occupy management roles, the social environment inside the firm shifts. The sense of being an outlier becomes less pronounced, peer support is available, and the tension between being a woman and being an entrepreneur eases.
An important caveat: because this is an observational study, it cannot definitively prove cause and effect. The researchers cannot directly observe the opportunities offered to each start-up, and they acknowledge that exit markets may treat women-led ventures differently. Women founders may also face biases from investors and acquirers that shape their options in ways the data cannot capture.
What this might mean for business
For entrepreneurs weighing their options, the findings offer a few practical considerations. Founders who want to keep control of their companies rather than sell or go public might view women co-founders as aligned with that goal. Women founders aiming for an exit may find it helpful to build management teams that include other women, potentially creating the internal conditions that support ambitious strategic moves.
For investors, the findings suggest that the gender composition of both the founding team and the management layer may carry information about a firm’s likely trajectory. For policymakers interested in closing gender gaps in entrepreneurship, programs that support women’s advancement into management roles, not just founding roles, could influence outcomes at the firm level.
The study is rooted in the Israeli technology sector, a context the authors describe as comparable to other Western economies in its gender dynamics but distinctive in its concentrated high-tech industry. Whether the same patterns appear in different cultural settings, or in industries outside of technology, remains an open question.
