The disproportionate impact of the pandemic on women extends through layoffs and women leaving the workforce to venture capital funding for women entrepreneurs. Over the past year, funding levels for women-led startups and startups led by co-ed teams have decreased as the total amount of risky dollars poured into startups has been many times higher.
According to Crunchbase, startups with all-female founding teams hit an all-time high of 3.4% of all US venture capital dollars in 2019. In 2020, that number fell to 2.4%, and that percentage has remained constant through the first two months of 2021, according to Crunchbase. According to Crunchbase, data is still being collected on deals closed in the past few months, so the numbers may change through February.
But not only female founders have suffered. Companies with joint founding teams saw their risk dollar share decrease from 11.6% in 2019 to 10.8% in 2020 to 10.3% earlier this year. The startups that have drawn a larger share of VC dollars are those with a team of all male founders: from 85% in 2019 to nearly 87% in 2020 to over 87% earlier this year.
Why do women get a smaller piece of the cake? Crunchbase’s senior data journalist Gene Teare points out that male-based businesses are more likely to attract larger rounds of funding, in part because they are older and more established. Women have drawn an even smaller portion of the startup circle in recent years, which offers newer women-founded companies an even larger funding gap.
In fact, PitchBook reports that the average size of a VC deal for all-female teams in 2020 was $ 6.8 million, compared to $ 18.7 million for all-male teams. However, PitchBook notes that there were more offers to female founders in February 2021 than in February of last year. Hence, once the numbers come in, it is possible that the numbers will get higher.
Another factor: According to All Raise, only 12% of decision-makers at VC funds are women. Predominantly male investors may have been more inclined to stick with their current networks during the pandemic and were less likely to meet new entrepreneurs.
Still, there is reason for hope: if investors follow the trends, they may see the value in supporting female founders. Teams that consist exclusively of female founders exist (sell or go public) faster, on average in less than 7 years, compared to the average of almost 8 years in which teams founded exclusively by men drop out. And female founders sell or go public on average with higher ratings. A number of new VC funds founded by women have been launched in recent months, with an emphasis on capitalizing on the often overlooked opportunities to support various founders.
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