Female founded startups struggling to increase share of VC funding
Venture capital funding overall has surged in recent years, but the numbers haven’t increased for female founders at the same pace. US VC funding for female-founded startups remains depressed, roughly in line with the declines seen across the venture ecosystem, financial data company PitchBook says. In Europe, female founders account for a larger share of overall European venture capital invested this year despite their share of deals remaining flat.
US startups with at least one female founder got $2.8 billion over 202 deals in April, in line with recent monthly totals. Dealmaking has declined for five straight quarters, the company’s data shows.
“In April, software companies raised the most money among startups with at least one female founder, led by a $372 million deal for network connectivity management platform developer PacketFabric, according to a regulatory filing.”
In 2022, US companies founded solely by women got just 2.1% of the total capital invested in venture-backed startups in the US.
“US VC funding for female-founded or co-founded companies has been trending up in recent years, and 2022 saw the creation of several women-led funds, incubators for female founders and more new companies.”
Female founders account for a larger share of overall European venture capital invested this year despite their share of deals remaining flat, according to PitchBook.
“As of the end of February, just under €1 billion has been invested in 269 deals involving companies founded or co-founded by women. This represents 24.4% of overall deal count and 19.4% of total capital invested in European startups”, the company says in a summary.
Although European female-only founded startups only received a fraction of overall VC investment, their percentage is going up. In 2022, they accounted for 0.9% of overall capital invested, whereas this year, that number has risen to 1.6%. Their percentage of deal count has remained at 5.3% for both years.
PitchBook says that European startups with both female and male founders have seen their share of both deal count and value rise this year with 19.1% and 17.8% respectively, compared to 18.3% and 11.8% in 2022.
The company says that while female founders have grown their share of European VC deals and capital invested, the increase is still relatively small.
A PitchBook European summary quotes Kinga Stanislawska, founder of investment community European Women in VC, saying this development is partly explained by a lack of women with decision-making power in VC firms.
“Until AUM (Assets Under Management) is allocated to female and diverse asset managers on the VC level, we cannot expect much change for female led and co-led startups,” Stanislawska said.
“It has been proven that women are three times more likely to invest in other women. Therefore, by allocating capital to those on the VC level, we are more likely to have a downstream effect on the funding to the female-led and -co-led startups.”
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