Can Female Venture Capitalists Improve the Investment Success Rate of Venture Capital Firms? Evidence from China

. Gender inequalities are widespread in the labor market, especially in the venture capital (VC) industry. Women are expected to balance work and family, and are left with limited energy to be competent in a high-intensity work environment, such as venture capital ﬁrms. However, the multiple roles women play help improve their multitasking ability, which makes female venture capi-talists (VCs) more patient and they tend to have a stronger resolve when faced with di ﬃ cult tasks. This study investigates the role of gender diversity and female VCs in the venture capital industry. Using a sample of 503 Chinese venture capital ﬁrms, we ﬁnd that female venture capitalists can signiﬁcantly increase the rate of successful investments owing to their investment experience in the industry. This e ﬀ ect is more signiﬁcant for independent venture capital ﬁrms. Female VCs a ﬀ ect investment success rates by changing the preferences of venture capital ﬁrms. In areas with a better institutional environment, they have a slightly greater impact on investment performance. The results suggest that women have a positive impact on the course of venture capital investment, and that they make a distinct contribution to investment behavior and success rate.


Introduction
The venture capital industry is known for its high degree of uncertainty, fierce market competition, and intense work environment (Gompers et al., 2020) [1]. Many female VCs have proved themselves to be active and successful. However, owing to the nature of venture investment and the influence of the traditional regressive mindset, male venture capitalists (VCs) occupy a dominant position in the industry. Gompers et al. (2022) [2] revealed that approximately 75% of venture capital firms (VCFs) have never had a female senior investment executive. Visible gender-based differences in decision-makers' risk preferences, social preferences, and competitive behavior have been noted (Faccio et al., 2016)[ [3], with female senior managers demonstrating distinctive attributes, such as high moral requirements, risk aversion, and prudence (Carter et al., 2017) [4].
Based on upper echelons theory, executives need a wide array of skills to be able to process vast amounts of information when making strategic decisions (Hambrick and Mason, 1984) [5]. Heterogeneous teams have more knowledge, creativity, and decision-making power than homogeneous teams, especially in an increasingly complex and rapidly changing business environment (Ali et al., 2022) [6]. Gender diversity is an important aspect of a diversified top management team (TMT) (Joshi et al., 2022) [7]. This raises many questions in need of further investigation: What roles do female VCs play in the male-dominated venture capital industry? How can female VCs affect the success rate of VCFs? Do other factors influence the investment success rate of women in a team? Most previous studies have focused on the effects of women on the boards of directors of listed companies and overlooked the impact of female executives in the venture capital (VC) industry, an industry with distinct characteristics.
This study makes several contributions. First, it enriches current research on the impact of female executives on the management of venture capital institutions. Unlike Gompers et al. (2022) [2], who studied the personal performance of VCs, the current study treats the TMT as a whole and analyzes female executives' impact on the overall investment success rate of venture capital institutions. Thus, it supplements the research on investment behavior and the investment success rate of venture capital institutions.
Second, this study explores the mechanism through which female VCs influence the investment success rate, which is related to research on the influence of gender heterogeneity on investment behavior. This study finds that venture capital institutions with a high proportion of female executives are more likely to invest in companies that are less risky, thereby increasing the investment success rate. From the perspective of investment preference, this study reveals other factors related to the venture capital investment success rate and supplements the relevant literature on female investment psychology.
Third, this study further distinguishes the role of female executives in different types of venture capital institutions. Owing to the high degree of information asymmetry of investment targets and insufficient post-investment management capabilities, governmental venture capital (GVC) performs poorly, which does not reflect its role in supporting innovation and entrepreneurship (Cumming et al., 2017) [8]. However, many executives are administratively appointed or delegated by government departments in GVC firms, which limits the role female VCs. This study reveals the reasons for the poor performance of the GVC from the perspective of the executive team structure.

Institutional Background
Traditional Chinese culture and literature lacks a comprehensive appreciation of the status of women. Women are ascribed a lower social status and are required to adhere to various behavioral and moral standards. Chinese women are obliged to care for their families, instead of taking on economic or social responsibilities. Therefore, traditionally, women do not have sufficient time or energy to function competently in a high-intensity work environment, such as that of a VC. Nevertheless, as a result of social and economic development, women's incomes, as well as their social and family status, are rising. Today, women play multiple roles in their families, which helps improve their multitasking abilities, making female VCs more patient and calm when faced with difficult tasks.
As the status of women advances, Chinese women are becoming not only productive, but also consumptive. The "she-economy" or "female economy" is a new concept in the Chinese consumer market, referring to a special economic phenomenon of female consumption and financing. Entrepreneurial behavior and business campaigns targeting women have consequently become increasingly prevalent in China. The rapid development of internet technology has led to the emergence of many female entrepreneurs. Nowadays, with the she-economy boom and the increasing numbers of female entrepreneurs, female VCs seem to be at an advantage with respect to information communication and value judgement. A further benefit arises during the investment process in which female VCs with their unique personality styles are usually more patient and obtain higher investment returns.

Literature Review
Upper echelons theory states that the background characteristics of top managers can influence their cognitive patterns and behavioral decisions, thus affecting the organization's strategic choices and performance levels (Hambrick and Mason, 1984) [5]. Gender is an important background characteristic of top managers (Joshi et al., 2022) [7], and executives of different genders often behave differently in terms of risk appetite, overconfidence, and altruism (Joshi et al., 2022) [7] (Schopohl et al., 2020) [9]. Under the same conditions, women are more risk-averse and less confident than men (Carter et al., 2017) [4]. From the perspective of the innate characteristics of female executives, studies find that they can increase the level of information disclosure and improve the quality of accounting information (Francis et al., 2019) [10].
In terms of investment, the risk-aversion preferences of female executives reduce the risk of R&D investment and curb excessive merger and acquisition (M&A) premiums. Companies managed by female CEOs have lower debt levels (Schopohl et al., 2020) [9] and higher survival rates (Faccio et al., 2016) [3]. Cumming et al. (2015) [11] found that women are more effective in male-dominated industries in reducing both the frequency and severity of fraud. In contrast, Chapple and Humphrey (2014) [12] found that female executives have no positive influence on company decision-making and performance. In China, which is affected by traditional gender inequalities in the workplace, female executives have weak discourse and female directors play a weak monitoring role on the board (Usman et al., 2018) [13].
Venture capital exit is the final stage in venture capital investment. VCs receive high returns if their portfolio companies are successfully exited (Gompers et al., 2008) [14]. Initial public offerings (IPOs) and M&A s are the most common and successful channels to exit, and can significantly promote investment performance and improve the reputation of VCF. Previous studies have demonstrated that social relationships (Butler and Goktan, 2013) [15] can affect venture capital outcomes. Ewens and Rhodes-Kropf (2015) [16] found that abilities and styles vary among different VCs, exerting a remarkable influence on investment performance.

Female VCs and Venture Capital Investment Success Rate
Gender diversity in a TMT increases the comprehensiveness and quality of decision-making processes. Venture capital investment presents a TMT with uncertain and complicated tasks, such as the formulation of a development strategy and the implementation of adjustments made necessary by changes in both the internal and external environments. A team with diversified human capital will have more information channels than a homogeneous team, enhancing its ability to collect information and provide more alternatives in the decision-making process. Female VCs' special cognitive styles and personalities, such as meticulousness, sensitivity, and emotional expressiveness, facilitate effective communication and cooperation when solving problems and assist the TMT in adapting to a dynamic environment. By offering innovative perspectives and opinions when making investment decisions and formulating strategies female VCs contribute to better conflict resolution and more effective decisions, thereby increasing the success rate of investments.
In addition, female VCs excel at team-building and staff motivation. Whereas male executives pay more attention to authority and leadership, female executives are more approachable and considerate. They conform to the standards of participatory democratic management. Significantly, the presence of women in a TMT can signal, both internally and externally, the absence of gender discrimination or other obstacles in the VCF and the possibility that employees can have access to better development and promotional opportunities. This is conducive not only to fostering highly committed employees but also to attracting suitable new talent to the firm. Since the venture capital industry is a fiercely competitive relatively perfect managerial market, staff mobility is high. Given the long lifecycle of venture capital projects, the increased presence of women in a group will help stabilize investment endeavors and ensure successful exits by reducing staff turnover and attracting an excellent workforce.
Further, female VCs help reduce investment risk by enhancing supervision. Being more risk-and loss-averse than men, women make safer and more cautious financial decisions (Carter et al., 2017) [4]. According to the selectivity model, differences in personality traits cause women to be more cautious and comprehensive when processing information. Therefore, female VCs can be more objective in decision-making and are more likely to discover special information relevant to the enterprise's profitability and risks, which is beneficial for reducing investment risks. Furthermore, women can help alleviate agency risks as they have a strong sense of morality, social responsibility, and supervisory motivation. In particular, industries geared toward women have become important sectors for entrepreneurs and VCs in line with the development of the female economy. Instead of just blindly chasing the trend in the female-oriented investment market, female VCs can effectively judge the prospects of female-oriented start-ups and the feasibility of their profit model, as they have a better understanding of their own gender's consumptive psychology and behavior. Therefore, based on the above analysis, we propose the following hypothesis: Hypothesis 1. VCFs with a greater proportion of women in their TMT will have a higher proportion of successful exits.

Effect of Human Capital on Female VCs
The knowledge background and investment experience of the TMT also have a considerable effect on the success rate of investments. Therefore, the human capital qualities of female VCs may play a positive role in improving the investment success rate. This study measured the human capital of female VCs along two dimensions: education level and work experience. Knowledge is the basis of the concept of human capital and includes explicit knowledge acquired in educational institutions as well as tacit knowledge acquired through experience in a particular field. As both aspects of knowledge influence perceptions of risk, return, opportunities, and threats, we elaborate the effect of human capital on female VCs in more detail.
Education is a crucial way of improving the quality of human capital, and an individual's level of education can reflect their learning, cognition, information processing, and judgement. Investment information is complex and changeable, and requires VCs to analyze and extract useful information from inside and outside an enterprise. VCs with higher levels of education can master and analyze complicated and unclear transaction information more efficiently and have a deeper and more comprehensive understanding of the investment environment. The higher the VC's level of education, the better their risk perception, selfdiscipline, and moral quality, all of which have a positive influence on the final investment outcome. Therefore, female VCs who are highly educated may be more trustworthy and have a positive association with firm performance.
The contribution of tacit knowledge is particularly strong in executing relevant tasks such as the pre-and post-investment activities of the venture capital process. Varying levels of tacit knowledge indicate that VCs' risk perception varies. During the venture capital investment process, VCs must deal with complicated investment risks and redundant information.
To improve their decision-making efficiency, they rely on their experience. Risk tolerance and control clearly varies among VCs with different levels of investment experience. Those who are experienced can inspect a company's market prospects and competitiveness more effectively, thus reducing the chance of investment failure during the project-screening phase. Therefore, the investment experience of female VCs can contribute to value-adding activities and lower the bankruptcy risk of the invested enterprises. Based on the human capital proposition outlined above, we propose the following hypotheses: Hypothesis 2. The higher the level of education of a female venture capitalist, the greater the influence on the VCF's investment success rate.
Hypothesis 3. The more experienced a female venture capitalist, the greater her influence on the VCF's investment success rate.

Impacts of VCF nature
The European and American venture capital industries are mainly independent venture capital (IVC), but in China, governmental venture capital (GVC) plays a significant role. Innovation and entrepreneurship are of great significance for regional economic development, technological progress, and industrial upgrading. To support such activities and regional economic development, governments have set up GVC to alleviate market failure problems. However, GVC differs vastly from IVC in its operating management and organizational forms, which may affect the role of female executives.
On the one hand, principal-agent problems are more complicated under state ownership because the TMTs are appointed by the administration based on their political backgrounds instead of professional proficiency. Guo and Jiang (2013) [17] determine that VCs in GVC are predominantly from governmental departments or state-owned companies, and most are selected and appointed by governmental bodies or parent companies. Compared with recruiting from the labor market, this type of personnel selection pool is small and requires less professional knowledge or fewer skills relevant to venture capital investment. Under such circumstances, female VCs in GVC are not hired according to actual managerial needs or selected through the market but rather chosen to serve as a 'facade' whose functions cannot be maximized and whose behavior and decision-making can be controlled.
On the other hand, the goal of GVC investment is not only return on investment, but also social value and public interest, thus affecting the independence of female executives in investment decision-making. GVC often invest in entrepreneurial enterprises with a higher degree of information asymmetry (Colombo et al., 2016) [18]. IVC can divest low-return investment projects as soon as possible, but GVC cannot, because this may generate social benefits. Because GVC is state owned, female executives cannot make fully market-oriented decisions, which affects their role. Based on the above analysis, we propose the following hypothesis: Hypothesis 4. Compared to those in the GVC, female executives in the IVC have a more significant impact on investment success rates.

Ordinary Least Squares Regression Method
As the dependent variable is continuous, we use an ordinary least squares (OLS) regression model to test the relationship between female executives and the success rate of venture capital as well as the moderating effect of human capital and the nature of the company. The main regression model expressions are as follows. (1) VCFSuccess =α + β 1 FemaleVCs + β 2 FemaleVCs * experience+β 3 experience+β 4 TMTsize+ β 5 Capitalsource+β 6 VCFage+β 7 VCFsize+β 8 Location+ε.
(4) As it is impossible to analyze the moderating role of female executives' human capital in venture capital institutions without female executives, we retained only the sample with female executives. In Models (2) and (3), the ratio of female executives (FemaleVCs), education level (education), and investment experience (experience) are all centralized to mitigate multicollinearity.

Sample Construction
To investigate the relationship between female VCs and VCF investment success rates, we require a sample of VCFs that have made sufficient investments in portfolio companies and have had sufficient time for those investments to reach an outcome. We conducted an empirical analysis based on samples from China's venture capital market and research data from the China Venture Source database. The initial sample is from all investment projects in the database before December 31, 2020. The China Venture Source database is an online database system that provides professional information about Chinese venture capital investment institutions, investment events, exit events, and VCs. We drew up a list of all VCFs that had invested in at least twenty portfolio companies and had at least one successful exit event by the end of 2020. However, in many cases, the information was incomplete and consequently we excluded such VCFs. Our final sample contained data on 503 VCFs, as listed in the China Venture Source database.
When collecting data on the gender and human capital of TMT members, we used the webpages of the VCFs. The CVs (Curriculum Vitae) of the team members are usually available in a section entitled 'management' or 'investment team' on the firm's home page. Combining the actual conditions of the Chinese venture capital industry, we defined the TMTs of the venture capital industry as all individuals with the highest ranking titles, including Founding Partners, Partners, General Partners, Presidents, Managing Directors, General Managers, Directors, and Principals. We collected 503 VCFs as samples, with 4,664 TMT members and an average TMT size of 9.272.

Measures
This study focuses on the investment events conducted by VCFs, and whether these had successful exits. Exit channels for the venture capital market include IPOs, acquisitions, buybacks, and liquidation. Most venture capital investment research considers IPOs and acquisitions as proxy variables for successful investment, which can significantly improve the performance of a VCF. Buybacks, liquidation, and projects that have not achieved exits over an extensive period are regarded as failed investments. We investigated the dependent variable, VCF Success, as the proportion of companies added to a VCF's portfolio that had exited through IPOs and M&As.
Additionally, the independent variable Female VCs is the proportion of females in a TMT. The educational background of female VCs in a TMT is calculated using their average educational level. The levels range from 1 to 5: 1 is assigned to technical school graduates or below, 2 to a college degree, 3 to a bachelor's degree, 4 to a master's degree, and 5 to a doctoral degree, respectively. The background experience of female VCs was calculated based on the average number of years they had been in the venture capital industry. The longer they had worked in the industry, the greater their investment experience. VCFs whose major shareholder or limited partnership was the State-owned Assets Supervision and Administration Commission (SASAC), state-owned enterprises, public institutions, state-run full-time colleges, and central or local governments, were considered to be GVC assigned with VCFnature 1, otherwise a zero was assigned.
Following previous research, we sought to eliminate various alternative explanations by using control variables. We used six control variables, all of which were measured using data from the China Venture Source database. In the decision-making process, a TMT needs to communicate and discuss repeatedly, and the number of executives will certainly affect the complexity of communication and efficiency in terms of information resource access. Thus, we introduced the variable TMT size to control for the impact on the investment success rate. In China, there are three main sources of capital for VCFs: domestic, foreign, and joint. International investors may have more investment experience, resulting in a higher investment success rate in China. Therefore, we used the capital source as a control variable, calculated as 0 for domestic capital, 1 for joint capital, and 2 for foreign capital.
We controlled for the age and size of the VCF because these may potentially influence their portfolio strategies. The VCF age was calculated as the number of years from the year of founding to the end of 2020. If the founding year was not found in the database or on the company's website, we assumed the year of the firm's first investment as a proxy. The VCF size is measured as the total funds, and the unit is one million yuan. For VCF size, a logarithmic scale was used to account for skewed distributions.
Finally, zone clusters are a key feature of the venture capital industry in China. VCFs located in Shanghai or Shenzhen are likely to have better investment success rates because of greater investment opportunities. Therefore, we introduced a dummy variable, Location, calculated as 1 if the VCF is in Shanghai or Shenzhen, otherwise zero.
Variables were specifically defined as shown in table 1.

Results
(1) Descriptive statistics The number of years from the establishment of VCF to the end of 2020 VCFsize Natural logarithm of total funds managed by VCF Location The value is 1 if the VCF is in Shanghai or Shenzhen, otherwise, it is 0.
The descriptive statistics for the variables are presented in table 2. On average, 14.7% of companies in a VCF's portfolio exited through IPO and M&A, higher than the median of 12.2%, showing a rightskewed distribution in the data. The ratio of female VCs in TMTs accounted for only 20.7% on average. The average education level of female VCs was a Master's degree (3.665 on average). The average work experience of female VCs was 10.04 years. The proportion of GVC was 23.1%. As for the control variables, the average number of people in the VCFs' TMT was 9.272, the capital was mainly from Chinese firms, the VCFs had been established for 12.27 years on average, the average fund scale was 15.13227 million, and 35.6% of the VCFs were registered in Shenzhen and Shanghai. To test the hypotheses, we used OLS regression analysis. Additionally, our collinearity diagnostics indicated that all variance inflation factor values were below 3.0, so the dataset did not have a multicollinearity problem.
The results of the correlation coefficient analysis are presented in table 3. Our results show a significant positive correlation between the investment success rate of venture capital institutions and the proportion of female VCs. The correlation coefficient was 0.178, significant at the 1% level, implying that VCFnature is significantly positively correlated with the  Notes: ***, **, and * represent 1%, 5%, and 10% significance, respectively. investment success rate. In terms of the control variables, capital source was significantly negatively correlated with investment success rate. VCF age was significantly positively correlated with the investment success rate.
(2) Female VCs and investment success rate The results of the OLS regression analysis for H1-3 are reported in table 4. To reduce the impact of outliers, all variables in the regression were winsorized at the top and bottom 1%. The regression results indicate that female executives had a significant positive impact on the success rate of venture capital institutions. The first column of table 4 shows the single-variable regression results of independent variables to dependent variables. The independent variables were significantly positive (B=0.089, P < 0.01). The second column of table 4 presents the regression results obtained after adding the control variables. There were significant coefficients for female VCs (B=0.095, P < 0.01). VCFs with a higher proportion of women in their TMT had a higher proportion of successful exits in their portfolios. Therefore, this finding supports Hypothesis 1.
In the next step, we estimated Hypotheses 2 and 3 by adding interaction terms. Specifically, the interaction of female VCs with experience (β= 0.015, P < 0.10) was significant, whereas the interaction of female VCs with education was insignificant (β= -0.073, P > 0.10). This suggests that, with an increasing proportion of female VCs, there is an increase in the proportion of successful exits, and this increase is greater for experienced female VCs than for inexperienced ones. This result confirms Hypothesis 3. Venture capital investment is full of risks and uncertainty, and education level represents only the explicit knowledge obtained through education. In the venture capital industry, the impact of written knowledge on investment practices and endeavors can be weakened. 6.038 Notes: ***, **, and * represent 1%, 5%, and 10% significance, respectively.
Finally, we tested Hypothesis 4 empirically, and the regression results are presented in table 5. First, the intersection term of female VCs and VCFnature was added to Model 4. The interaction between female VCs with VCFnature (β = -0.087, P < 0.10) was significant. This suggests that the function of female VCs is weakened in the GVC. The sample was divided into GVC and IVC subsamples for a robustness test. First, we checked the ratio of female VCs in VCFs with different natures and found that for GVC, it was 32.343%, while for IVC, it was 17.153%, which was significantly different (t=-7.561). Thereafter, we used the two sub-samples to analyze the impact of female VCs on the investment success rate of firms with different enterprise characteristics. The second and third columns of table 5 report the regression results of the test impacts of GVC and IVC, respectively. According to the table, in the GVC, female VCs (β= 0.059, P > 0.10) were not significant, while in the IVC, female VCs (β= 0.142, P < 0.01) were significant. Although there is a large proportion of female executives in the GVC, this may be due more to political considerations and cannot be considered worthy of study.
(3) The mediating role of investment preference Based on the empirical results, we found that female VCs could improve a VCF's investment success rate. Female VCs are characterized by traits such as risk aversion and no overconfidence (Carter et al., 2017) [4]. When a female CEO replaces a male CEO, the 476 Notes: ***, **, and * represent 1%, 5%, and 10% significance, respectively. enterprise is significantly less willing to take risky actions. During venture capital investment, high-tech enterprises have higher uncertainty and investment risks. When VCs invest in high-tech enterprises that need larger investments and have a higher level of risk, they accept the possibility of failure. Female VCs may therefore eschew such investments and be more likely to opt for investments in low-risk projects, thereby lowering the possibility of failed investments.
To determine the influence mechanism and verify the reliability of the hypotheses, we tested whether female VCs could affect the investment success rate by changing the VCF's investment preference. We introduced a continuous variable, high tech, measured as the proportion of high-tech companies in a VCF's portfolio, to indicate a VCF's preference for investing in high-tech companies. We examined the categories of investment industries in the China Venture Source database, and following the Measures for the Determination of High and New Technology Enterprises jointly issued by the Ministry of Science and Technology, Ministry of Finance, and State Administration of China in 2016, defined the Internet industry (010000), telecommunication and value-added industry (020000), information technology industry (030000), new energy and energy conservation technology industry (040200-040900), and health care industry (130000) as high-tech industries.
The results of the OLS regression analysis are reported in table 6, where all variables are winsorized at the top and bottom 1%. First, we tested the relationship between female VCs and investment preferences for high-tech companies. The results indicated significant coefficients for female VCs (β= -0.12, P < 0.05), suggesting that the higher the ratio of female VCs in a venture capital investment firm, the fewer high-tech companies it will invest in. 476 Notes: ***, **, and * represent 1%, 5%, and 10% significance, respectively.
Next, we tested the relationship between investment in high-tech companies and the VCF's investment success rate. The regression results indicate that the effect of High tech is negative and significant (β= -0.054, P < 0.01), and a higher proportion of high-tech companies are associated with a lower investment success rate. Finally, we estimated the mediation function of investment preference by adding the variables female VCs and High tech. The regression results indicated that both female VCs (β= 0.09, P < 0.01) and High tech (β= -0.46, P < 0.05) were significant. However, compared with Model 1, the coefficient of female VCs dropped from 0.095 to 0.09. Therefore, the effect of female VCs on the investment success rate of VCFs is partially mediated by investment preferences. Therefore, female VCs can influence a VCF's investment success rate by influencing its investment preferences.

(4) Impact of institutional environments
China is one of the most imbalanced nations in the world in terms of regional economic development, with VCFs and venture companies mainly concentrated in eastern and coastal developed regions, such as Beijing, Shanghai, and Guangdong. Market-oriented reforms and imbalanced regional development have led to relatively large gaps in regional economies and institutional environments, giving rise to regional variations in how the public, company shareholders, and management perceive and treat female VCs. In regions with better institutional environments, financial markets are more developed and mature, there is less government interference, and judicial and administrative efficiencies are high. These factors help secure the interests of VCs and decrease the risks and uncertainties in investment.
As such, we tested whether the regional institutional environments in which the VCF is located can affect the function of female VCs. The data describing the quality of the institutional environment were sourced from the Marketization Index of China's provinces. The data are derived from China's market index. The larger the marketization index (MINDEX), 11.69 Notes: ***, **, and * represent 1%, 5%, and 10% significance, respectively. the better the institutional environment. Descriptive statistics are based on the marketization index of China's provinces., The average value of MINDEX was 9.237. The samples were grouped based on the mean value of MINDEX. Provinces with a marketization index greater than 9.237 were considered as areas with a better institutional environment; otherwise, they were considered as areas with a poor institutional environment.
First, we regressed the data of regions with a better institutional environment. The regression results are presented in the first column of table 7. The regression results reveal that female VCs have a significantly positive impact on VCF success (β= 0.096, t = 3.55). For regions with poor institutional environments, the regression results are presented in the second column of table 7. The coefficient of the independent variable is 0.85 (t=2.500). Comparing the regression results, we found that in areas with a better institutional environment, female VCs have a slightly greater impact on investment performance. We further multiplied MIN-DEX and the independent variables into the regression model, and the regression results are presented in the third column of table 7. The interaction between female VCs and MINDEX (β= -0.033, P > 0.10) was not significant. These results indicate that the level of marketization does not have any significant effect on the function of female VCs.

Conclusion
Venture capital has always been closely linked to innovation and technology, and it continues to make self-adjustments alongside the rapid development of modern technology, which in turn has driven changes throughout the entire industrial chain (Gornall and Strebulaev, 2020) [19]. Owing to the need to play multiple roles in their social life, female VCs show more patience and resilience during uncertainties and possess stronger problem-solving abilities. They may be better at handling the complicated environment inherent in venture capital investment. Consequently, whether VCFs can harness females' unique advantages to improve firm performance has become a theoretical question to be examined. While many believe that the industrial characteristics of the venture capital industry make it unsuitable for women to participate in, we find that they have a positive impact on the course of venture capital investment and make a clear difference in both investment behavior and the investment success rate. Thus, it is important to pay attention to the role of female VCs in the venture capital industry.
Based on a sample of 503 Chinese VCFs, this study investigates the impact of female VCs on the VCF investment success rate and obtains some interesting findings. First, there was a positive relationship between female VCs and the success rate of VCFs. While investment experience in the venture capital industry can improve the functions of female VCs, the influence of educational background is not significant. Moreover, the study reveals that this positive relationship is affected by the nature of the firm, and the influence of female VCs in GVC is not significant. Furthermore, this indicates that female VCs affect the success rate by changing the preferences of VCFs. In areas with better institutional environments, female VCs have a slightly greater impact on investment performance.

Discussion
In today's rapidly developing knowledge economy, women play a vital role in creating wealth for enterprises. To benefit to the maximum from the advantages that female VCs have when investing in female-oriented start-up projects, VCFs should account for changes in the market and take active steps to amend the gender composition of their TMTs based on investment strategies and directions. Female VCs may promote entrepreneurial activity, especially female entrepreneurship, but may not effectively support innovative endeavors. When setting up guidance funds or state-owned capital that aims to encourage innovation, the government should pay attention to the gender composition of a VCF's TMT in predicting whether the firm can genuinely accomplish the original intention of its policy.

Limitations and Future Directions
This study has some limitations and space for expansion. First, during the analysis of the influence mechanism, it was discovered that, in addition to investment preference, female VCs may also affect the outcome in other ways, such as resource advantages and team motivations, which could not be investigated with the currently available data. Questionnaires and interviews could be used to conduct an in-depth study on VCFs. Second, the performance of VCFs can be evaluated in two ways: by using the success rate as adopted in this study, and by using the return on investment when a VCF exits an investment. While the latter would seem to be more accurate, it is limited to IPO exits, in which disclosed accounting information is more complete and regulated. This method of evaluating the performance of VCFs could lead to sample selection bias and cannot be effectively utilized to assess a firm's overall performance. Further research should focus on the influence of female VCs on investment returns based on adequate data collection.