Less than 2% of VC funding went to all-female founding teams in 2021, marking a five-year low, new Pitchbook concert data. All-female founding teams received 83% more funding in 2021 in absolute dollars compared to the year before, but that’s likely because US startups in general raised a record amount of money last year.
Still, the high tide did not lift all the boats. The share of funding for all-female founding teams has fallen for the second year in a row, according to pitchbook.
So how is it that, despite the recent boom in startup funding, the venture capital industry is becoming an even harder place for women to raise money?
Venture investor Del Johnson hosted a Twitter Spaces conversation last week that sparked discussion of whether and why all-female founding teams are at a disadvantage in the fundraising process — despite the The number of women in venture capital has increased in recent years.
A theory shared by Johnson is that “male power brokers [are] more likely to select or fund VC women who share their own patriarchal biases, aand keep out the many women who don’t share these views,” he told Ploonge in a written message. In short, female VCs are just as likely to favor male founders as their male counterparts.
Serial entrepreneur Gentry Lane, who was part of the discussion and spoke with Ploonge afterwards, also believes the venture industry is inherently biased against women. How else to explain that while top VCs are more accessible than ever because of Zoom and online interactions, the share of funding going to all-female founders is falling, not rising? It’s “systemic misogyny,” says Lane, who is the CEO and founder of national security software company ANOVA Intelligence.
However, other theories emerged in the Twitter Spaces conversation. VCs are more comfortable organizing events dedicated to helping underrepresented founders than actually funding them, some of the attendees suggested. Instead of writing checks, investors engage in so-called virtue signaling, these frustrated entrepreneurs noted.
Lane also suggested that VCs’ enduring focus on presentations and pitch decks rather than “normal human conversations” continues to negatively impact underrepresented founders, who typically have less experience with both.
The investment stage can also play a role, discussion participants noted, as much of the overall rise in venture finance in 2021 was driven by later stage rounds, who tend to be dominated by male founders.
While speculation abounds, there was a silver lining to this Pitchbook report. Namely, Pitchbook data shows that venture capital-backed companies with at least one female founder captured more than 25% of last year’s total venture deals by count, representing 17.6% of the total value of the venture. business. Founding teams with both men and women accounted for the vast majority of these businesses.
Shriya Nevatia of the On Deck accelerator program cited the Pitchbook data as cause for optimism, pointing to the recent increase in the percentage of deals with at least one founder. in a tweet yesterday. Wrote Nevatia: “This is much closer to 50% – up from 11.8% in 2008 – this is very fast!!”
She then tweeted: “We THEY ARE progressing, keep it up.”