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Female-led startups and investors face uphill battle in VC industry

March 21, 2019
By: Robert Ksiazkiewicz

Both female-founded startups and female investors have seen slow progress over the past 10 years, and still face an uphill battle for equality in the venture capital industry. While the deal count for companies founded solely by women has more than quadrupled since 2008, the share of venture dollar invested has remained nearly flat, hovering around 2.0 percent over the same time, according to PitchBook. Similarly, only 10 percent of VC ‘decision-makers’ are women, up from 5.7 percent in 2016.

In 2018, companies founded solely by women attracted only 2.3 percent of all dollars invested, according to PitchBook. In total, 482 companies founded solely by women raised approximately $2.88 billion last year out of the approximately $130 billion that was invested by VCs in 2018. While the deal count of female-founded companies has nearly quadrupled since 2008, their percentage of deals has remained in the single digits at approximately 5.8 percent of all deals in 2018, up from only 3.3 percent in 2008.

An even more startling statistic concerns the number of women of color in attracting VC dollars. Between 2009 and 2018, companies founded by black women raised only $289 million – approximately 0.0006 percent of all VC dollars invested over that time, according to DigitalUndivided’s biennial Project Diane study. For Latinx-owned businesses launched between 2007 and 2012, only 1 percent of those companies raised VC or angel capital dollars, according to a 2016 Stanford University survey.

For companies with a mixture of female and male founders, the numbers are only slightly more encouraging. Approximately 8 percent of all VC dollars invested went to companies founded by a team that included at least one female, down from approximately 14 percent in 2017. These companies, however, have seen a slow, steady rise in the percent of deals from 8 percent in 2008 to nearly approximately 15 percent in 2018.

Overall, only 17 percent of current venture-backed companies in the U.S. had female founders in 2018. This troubling stat has been stuck at approximately 17 percent since 2012.

One of the potential causes for these disparities between startups founded by women and their male counterparts is the difficulty that they face in attracting first financing from VC firms. Between 2005 and 2017, the share of VC first financing going to women-founded startups tripled from 7 percent to 21 percent. However, this still marks only a small percentage of the total dollars and deals invested because many of these deals occurred in the seed stage. Similar to industry averages, only about 50 of these companies received a second financing round within three years and only 30 percent received a third financing round within five years.

While VC support for female-led companies has largely stagnated over the past couple of years, the number of female ‘decision makers’ at VC firms has increased steadily, but slowly, over the past five years, according to data released by Axios. In 2019, nearly 10 percent of VC ‘decision makers’ at firms – partners and other individuals with the ability to make final decisions on investments – are women, up from 5.7 percent in 2016. In total, Axios reports that there are 170 women at the partner level at VC firms among the firms included in their survey. However, it is still uncommon for a U.S. VC firm to have a female partner, with only 26 percent of U.S. VC firms reporting at least one female investor.

Beyond the U.S., Canada and Europe also struggle with equality in their VC markets. In Europe, 93 percent of venture money went to startups with all male founding teams in 2018. Since 2014, 90 percent of all VC deals went to companies founded exclusively by men.


venture capital, women, startups