In 2022, All US startups with all-women teams received just 1.9% which is around $4.5 billion out of around the $238.3 billion in venture capital funds allocated for the year, as per the latest PitchBook data records.
That drop percentage is notable from the 2.4% all-women teams raised in the year 2021. Although the decline was expected, due to the economic climate of 2022, the bear, the bust, the winter. In fact, apart from the year 2016, last time all-women-led startups raised such a low percentage of funds in US was in the year 2012, which was another time of funding decline caused due to economic uncertainty and the election.
US Women Startups Raised 1.9% Of Total Capital Funds
The ironic fact is that the percentage of fund raise is however found to increase when an “all-women team” turns into having at least one male founder, which signifies the importance of having a man in the room. The augmentation is quite noticeable too as all-women teams raised just 1.9% of VC funds in the year 2022, while the percentage skyrocketed to 17.2% when the team was included both men and women. This trend has remained consistent for at about a decade now.
A partner at the Anthemis Group, Ruth Foxe Blader spoke about this discrimination to TechCrunch, she said, “When the economy tanks, discrimination feels justified, managers double down on what they perceive as ‘safe’ and ‘boring.’ Investing in women is still perceived as high-risk. LPs need to look beyond manager diversity and into their investment portfolios if we want to change this industry; 1.9% is deplorable.”
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However, the good news being, the total capital invested in female-founded companies, including all the mixed-gender teams, is at the second-highest level, with the record-breaking year 2021 still on the top. Also, the deal count for female founded teams remains at its second-highest with 1,001 closed, right behind the 1,190 closed in 2021.
The 1.9% of venture capital funds for all-female teams raised in the U.S. can be considered a bit better than what their counterparts received in Europe, which is around just 1.1%. Although Europe and North America are culturally apart but are not so different when it comes to gender based discrimination.
The founder of the social network app Communia, Olivia DeRamus said to TechCrunch, that unless these systemic issues are not addressed, importantly in the investment industry, it will be really difficult to move the needle towards equality. She also added, “There are still deeply entrenched discrimination with women, and given that founders often create solutions for problems we experience firsthand, our companies may solve a requirement that male investors don’t appreciate or understand, We constantly battle just to be taken seriously, even if our companies might be having even more compelling growth, traction and metrics than startups run by all male founders.”
The founder of the fintech Guava, Kelly Ifill said, that she wasn’t even surprised that funding for women founders were dropped, she further added, “Changing those numbers will require a lot of reflective work to get past unconscious biases, considering ‘nontraditional’ backgrounds and places, and frankly being more open.” She also added that it’s a very well known fact that businesses led by women have shown higher rate of success over the years. The sad truth is that facts aren’t enough for the investors with a misogynistic mindset to fund the founders.