Research suggests that it can be harder for women-led startups to raise capital, as compared to their male counterparts. Studies have found that women-led startups receive significantly less venture capital funding than male-led startups, and that women entrepreneurs are often less likely to be successful in raising capital.
One of the reasons for this is the lack of representation of women in venture capital firms, where the majority of partners are men. This means that there are fewer female decision-makers who can identify with and relate to the female entrepreneurs who are seeking funding.
Another reason is the unconscious biases and stereotypes that can exist in the venture capital industry, which can make it harder for women to be taken seriously as leaders and to be perceived as viable investment opportunities.
There are also studies that have shown that when women do raise capital, they tend to receive less than men for the same amount of equity, despite the fact that the companies led by women tend to have a higher return on investment.
Despite these challenges, many women-led startups are able to raise capital and go on to achieve success. It is important for women-led startups to network and make connections in the venture capital industry, as well as to be prepared to pitch their business and present a strong case for investment.
It’s worth noting that the ecosystem is changing, more female led funds are being created, and more women are becoming venture capitalists and angel investors which can lead to a more balanced and equitable environment for funding women-led startups.
Several studies have found that women-led startups receive significantly less venture capital funding than male-led startups.
- A study conducted by the National Women’s Business Council (NWBC) in 2018 found that women-led startups receive only 2.2% of venture capital funding, despite the fact that they own 42% of all businesses.
- A study published in the Harvard Business Review in 2018 found that, from 2011 to 2013, only 2.2% of venture capital went to companies with all-female founder teams, while only 9% went to companies with a single female founder.
- A study published in the journal “Venture Capital” in 2018 found that venture-backed startups led by women have lower revenue, lower valuations and lower acquisition prices than those led by men.
- A study conducted by PitchBook in 2018 found that only 2% of venture capital in the US went to companies with all-female founding teams, while only 7% went to companies with a single female founder.
- A study by the National Center for Women & Information Technology (NCWIT) found that between 2011 and 2017, just 2.2% of venture capital funding went to companies with all-female teams, while only 9% went to companies with a single female founder.
These studies clearly show a significant gender gap when it comes to venture capital funding for women-led startups, and they also highlight the need for more diversity and inclusiveness in the venture capital industry.
Also, several studies have found that women entrepreneurs are often less likely to be successful in raising capital compared to their male counterparts.
- A study published in the Journal of Business Venturing in 2018 found that female entrepreneurs are less likely to be successful in raising capital, and that they are more likely to receive smaller amounts of capital when they do raise it.
- A study conducted by the National Women’s Business Council (NWBC) in 2018 found that women-owned businesses are less likely to receive venture capital funding and are more likely to receive smaller amounts of funding when they do.
- A study published in the Harvard Business Review in 2018 found that, female-led startups are less likely to receive venture capital funding, and when they do, they receive less than their male counterparts.
- A study conducted by the National Center for Women & Information Technology (NCWIT) found that between 2011 and 2017, only about 4% of venture capital went to startups founded by women, and that these startups received less funding on average than those founded by men.
- A study by PitchBook in 2018 found that female-founded startups received just 2% of venture capital funding, and that companies with at least one female founder received 12%.
These studies provide evidence that women entrepreneurs have a harder time raising capital.
There are a growing number of female-led venture capital and private equity funds, which are focused on investing in and supporting women-led startups.
- All Raise, is a non-profit organization that aims to increase the representation and success of women in venture capital by providing networking and educational opportunities, and by promoting the visibility of female investors and female-led startups.
- Female Founders Fund, is a venture capital firm that invests in early-stage technology companies founded or co-founded by women. They are focused on companies in the consumer, enterprise, and healthcare sectors.
- The Helm, is a venture capital firm that invests in women-led companies in the consumer and enterprise sectors. They are also focused on providing education, mentorship and networking opportunities to the female entrepreneurs in their portfolio.
- 37 Angels, is an angel investing group that focuses on investing in women-led startups. They also provide education and networking opportunities to female entrepreneurs.
- Golden Seeds, is an angel investing network that focuses on investing in women-led startups. They have a strong presence in the US and have invested in over 200 companies.
- Astia is a global organization that provides education, networking, and funding opportunities to women-led startups in the high-growth sectors.
- BBG Ventures, is a venture capital firm that invests in early-stage technology companies founded or co-founded by women. They focus on companies in the consumer, enterprise, and healthcare sectors.
These are just a few examples. With more and more women becoming venture capitalists and angel investors, it can lead to a more balanced and equitable environment for funding women-led startups.