Despite a greater surge in fundraising thanks to megafunds and the introduction of Zoom investing, the coronavirus pandemic disproportionately reduced venture capital funding for female founders last year. As a result, the landscape became uneven, with capital flowing more toward men than was historically normal.
However, according to new PitchBook data, the gender gap in startup fundraising is closing slightly. Through the first three quarters of 2021, female-founded companies raised $40.4 billion in 2,661 transactions, nearly doubling the total of $23.7 billion in 2019 and more than ten times the total of $3.6 billion in 2011.
There is still much work to be done, as we are still far from being even, fair, or seeing enough change to stop tracking this data set. Women-founded businesses continue to raise less money and receive lower valuations from investors.
While the rising tide of venture capital hasn’t lifted all boats, we’ll use this data to look for early signs of a resurgence for the historically underserved group, from funding to exits to decision-makers.
Investment in female-founded startups is increasing.
Global venture capital totals are surging, following a brief period of COVID-induced conservatism that caused some startups to struggle to raise capital at the start of the pandemic. Female founders are breaking records in this environment, according to PitchBook, which analyzed investment activity in U.S.-based startups with at least one female founder.
You weren’t overly pessimistic if you didn’t expect to see an increase in the number of female-founded startups this year: Despite rising venture capital totals in general, female-founded startups in the United States saw their deal count fall by 2% and total dollars invested in their businesses fall by 3% in 2020.
Female-founded startups raised fewer dollars from fewer rounds as the venture capital pie grew larger, a significant decrease from previous years. According to PitchBook, female founders closed 150 to 200 deals worth $700 million to $950 million per quarter in 2019. The cohort only received 136 rounds totaling $434 million in Q3 2020. That was in a more affluent neighborhood.
In better news, the backsliding has largely ceased in 2021. It has indeed shot in the opposite direction.
The headline figure of $40.04 billion for U.S.-based, female-founded startups does not adequately reflect the accelerating rate at which female founders have raised capital. Take a look at the chart below from the PitchBook-NVCA report: