Female founders struggle to raise money during boom times for VC investments

There is progress being made in recruiting more female engineers to tech jobs, but things are at a standstill when it comes to VC investments.
Written by Tom Foremski, Contributor

US startups led by female founders received the lowest level of capital investments this year compared with a five-year period during a boom year for venture capital investments.

A study by Crunchbase, which monitors investments in startups, reports that for the first seven months of 2021, female-founded startups have received 2.2% of total funding -- the smallest level since 2016.

Startups with female and male founders received 11.7% of total funding, which is about the same level as in prior years of about 12%.

The Crunchbase report is part of its Something Ventured project, which monitors progress on diversity in venture capital investments. The latest numbers indicate a steadily worsening investment climate for female-founded companies, with the best year 2019 with 3.3% of total funding then dropping a full percentage point to 2.3% in 2020.

It appears that female founders, even with male co-founders, cannot shed discriminatory actions by VCs since all-male founders receive the largest amount of VC investments by far.

Crunchbase says that the final numbers for the last four months of 2021 might be better than they seem because many deals have not yet been reported. Only startups that have named founders are counted, and also private equity investments are not included in its figures.

In addition to fewer deals, female founders raise smaller amounts than male counterparts. 

However, in biotech and health-related startups, female founders fare better and are part of much larger deals and that those startups generally IPO at an earlier date than tech startups.

Also, 39 companies with all-female or mixed-gender founders became "unicorns" in 2021 out of 327 total unicorns so far this year. Crunchbase reports that this is on par with prior years.

More info can be found here.

Editorial standards