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Financing of women founded startups

Women founded startups get larger share of European venture capital

Female-only founded startups only receive a fraction of overall VC (Venture Capital) investment but their percentage is going up. Female founders account for a larger share of overall European venture capital invested this year despite their share of deals remaining flat, according to financial data and software company 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 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.

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“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.

The PitchBook 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. 

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“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.”

PitchBook says venture capital funding overall has surged in recent years, but the numbers haven’t leapt forward for female founders at the same pace. Last year, companies founded solely by women garnered just 0.9% of the total capital invested in venture-backed startups in Europe.

“But that number doesn’t tell the whole story. VC funding for female-founded or co-founded companies in Europe has been trending up in recent years, and 2021 saw the creation of several women-led funds, incubators for female founders and more new companies.” 

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