In the initial half of 2024, there’s been a noticeable drop in the amount of funding secured by startups with female founders (inclusive of teams with both male and female founders), securing $15.5 billion of the total $93 billion — or 17% — a decrease from the $24.8 billion out of $87.7 billion — or 28% — reported in the first half of 2023, based on figures from PitchBook.
Throughout the current year, ventures entirely founded by women have garnered only 2.2% of the venture capital available. PitchBook’s records indicate that such all-female teams have historically never exceeded a 3% share of venture capital funding since 2014, consistently landing around 2% over the last four years, despite the total funding to U.S. startups reaching unprecedented levels.
2024 has proven to be particularly tough for exclusively female-founded companies, showing a significant slowdown in investment activities compared to the previous year, according to Kyle Stanford, PitchBook’s senior venture analysis lead, in a discussion with TechCrunch. Stanford explained, “The precise reasons for this trend are not clear from our data. However, with investors tending more towards supporting existing portfolio companies, there’s a reduced pool of capital for new investments. Moreover, the investment landscape for women and minority founders has been adversely affected by recent political developments, exemplified by the June ruling against the Fearless Fund.”
Stanford highlighted that the decline in investment opportunities is evident in the decreasing number of deals involving female-founded startups. The first half of 2024 saw 372 such startups receiving venture capital, a drop from 536 in the same period in 2023.
“Most companies founded by women are in the nascent or early developmental stages,” he further added, noting the challenges facing early-stage venture capital investments which demand higher benchmarks for subsequent funding rounds. “This often puts such startups at a disadvantage in securing new rounds of investment.”
Nonetheless, there have been notable successes, including a $50 million seed funding for Julie Bornstein’s startup DayDream in June, which aims to develop an AI-driven e-commerce search engine.
Stanford also noted a positive trend: “Investment in growth-stage ventures founded by women could potentially reach a record high this year,” with one particular success story being Romi Gubes’ Sensi.AI, which secured a $31 million Series B funding to enhance senior care monitoring.
Additionally, there’s a slight uptick in investments towards solely female-founded firms, with a significant $1.1 billion raised in Q2 of 2024 compared to $900,000 in Q2 of 2023, marking the highest quarterly funding since Q2 of 2022, when they raised $1.5 billion.
However, the overarching trend suggests that startups with only female founders are set to receive around just 2% of venture capital funding for the year.
Kate Bodrova, the founder of the edtech startup Amazy, shared with TechCrunch that mixed-gender founding teams often enjoy better funding outcomes due to perceived more diverse perspectives and broader skill sets. Currently in fundraising, Bodrova, who has a co-founder, emphasized that while bias in the venture capitalist world is likely at play, the focus for founders should remain on growth and showcasing a team that can demonstrate competent handling of the business.
“Demonstrate your value through tangible results,” she advised. “That’s the path to attracting funding.”
Compiled by Techarena.au.
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