Homophilous founding teams and AI ventures’ innovation

Homophily plays a crucial role in shaping economic outcomes. Yet its relationship with innovation remains underexplored. This study examines whether homophily within venture founding teams influences venture innovation performance. Using a dataset of 9,640 Artificial Intelligence (AI) ventures-ventures that employ AI-related technologies in their operations-established across 98 countries between 2000 and 2024, we document that ventures with homophilous founding teams-composed of members of either the same gender or the same ethnicity-exhibit lower innovation performance compared to ventures with heterophilous founding teams.