First Half of 2024 Sees Slower Growth in Venture Capital Funding for Female Founders
According to recent data from PitchBook, the first half of 2024 has seen a decline in venture capital funding for women-founded companies compared to the same period last year. Despite record-high capital allocation to U.S. startups, female founders have struggled to secure funding, with all-women founding teams raising only 2.2% of the total venture capital allocated so far this year.
Historical Context: Limited Progress in Venture Capital Funding for Female Founders
Since at least 2014, companies with all-female founding teams have consistently raised less than 3% of total venture capital funding. In fact, the past four years have seen an average of around 2% of venture capital funding allocated to all-women founding teams, despite record-breaking amounts of capital being invested in startups.
Investment Challenges for Female Founders
PitchBook’s lead venture analyst, Kyle Stanford, notes that the current investment landscape presents significant challenges for female founders. "Our data doesn’t necessarily indicate why this may be," he says, "but as investors retract to support their current portfolios, there is less capital available for investment into new companies." He also highlights the impact of the current political climate on investment in women and diverse founders.
Political Climate: A Challenge to Investment in Diverse Founders
The recent ruling against Fearless Fund in June serves as a stark reminder of the challenges facing female founders. As Stanford notes, "the current political climate is challenging investment in women and diverse founders." This sentiment is echoed by other industry experts, who emphasize the need for greater support and resources for underrepresented founder communities.
Deal Counts: A Slight Decline
The data suggests a slight decline in deal counts for female-founded companies. In 2024’s first half, VCs backed only 372 startups with female founders compared to 536 in the same period last year. This trend is concerning, as early-stage venture capital remains challenging, and many companies struggle to advance due to increased benchmarks for new rounds.
Breakout Successes: A Glimmer of Hope
While the numbers may be discouraging, there are signs of hope. For example, Julie Bornstein’s new startup DayDream raised a $50 million seed round in June to work on an AI-powered e-commerce search engine. Additionally, venture growth-stage investment in female founders is on pace for an annual record high.
A Bright Spot: Venture Growth-Stage Investment
Romi Gubes’ Sensi.AI grabbed a $31 million Series B to monitor seniors. This trend suggests that while early-stage funding may be challenging, women-led startups are making significant strides in growth-stage investment.
Slight Increase in Funding for All-Female Founding Teams
In a glimmer of good news, companies with all-female founding teams saw a slight increase in year-over-year funding. In Q2 2024, these teams raised $1.1 billion compared to the $900 million in Q2 2023.
Industry Insights: Kate Bodrova’s Perspective
Kate Bodrova, founder of edtech Amazy, notes that mixed-gender teams often secure more funding due to perceived balanced perspectives and a broader skill set. However, she emphasizes that bias within the VC community is likely a factor, rather than gaming the system.
Industry Experts Weigh In: Addressing the Challenges
Industry experts emphasize the need for greater support and resources for underrepresented founder communities. This includes initiatives aimed at increasing diversity in venture capital firms, as well as programs designed to provide mentorship and networking opportunities for female founders.
While the data may be discouraging, there are signs of hope on the horizon. As the industry continues to grapple with the challenges facing female founders, it is essential to address the systemic issues preventing underrepresented communities from securing funding. By working together to create a more inclusive and supportive investment environment, we can unlock the full potential of women-led startups.
