The data from Pitchbook reveals that funding to women-founded companies, including mixed-gender teams, has decreased in the first half of 2024 compared to the same period in 2023. In the first half of 2024, these companies received $15.5 billion out of $93 billion, which accounts for 17% of the total funding. This is a decline from the first half of 2023 when they received $24.8 billion out of $87.7 billion, representing 28% of the total funding.
Furthermore, companies with all-women founding teams have struggled to secure venture capital funding this year, raising only 2.2% of the allocated funds. This trend has been consistent since at least 2014, with all-women founding teams never raising more than 3% of venture capital funding. Even during periods of record-high capital allocation to U.S. startups, these teams have consistently raised around 2% of venture capital funding.
According to Kyle Stanford, Pitchbook’s lead venture analyst, companies with all-women teams are facing a challenging year compared to last year. The decrease in funding can be attributed to investors retracting support for their current portfolios, resulting in less capital available for new investments. Additionally, the current political climate presents challenges for investment in women and diverse founders. Stanford highlights a ruling against Fearless Fund in June as an example of these challenges.
The dwindling deal counts further illustrate the difficulties faced by female founders. In the first half of 2024, venture capitalists backed 372 startups with female founders, compared to 536 in the same period of 2023. Stanford emphasizes that a majority of female-founded companies remain in the seed and early stage of the venture capital lifecycle. This poses a problem as early-stage venture capital has become more challenging, with increased benchmarks for new rounds.
Despite these hurdles, there have been some success stories. Julie Bornstein’s new startup, DayDream, raised a $50 million seed round in June to develop an AI-powered ecommerce search engine. Additionally, investment in female founders at the venture-growth stage is on track to reach a record high this year, with examples like Romi Gubes’ Sensi.AI securing a $31 million Series B to monitor seniors.
While there are some positive trends, the reality is that startups with all women founders are still projected to raise only around 2% of venture capital funding this year. Kate Bodrova, founder of edtech company Amazy, recognizes that mixed-gender teams often secure more funding due to perceived balanced perspectives and broader skill sets. However, she advises founders, regardless of gender, to focus on performance and building a team resume that demonstrates capability. According to Bodrova, funding will follow when value is consistently provided.
In conclusion, the data highlights the challenges faced by women-founded companies and all-women founding teams in securing venture capital funding. While there have been some positive developments, such as increased funding for companies with all-female founding teams in Q2 2024 compared to the previous year, the overall funding landscape remains challenging. The disparity in funding between mixed-gender teams and all-women teams indicates the presence of bias within the VC community. However, founders are advised to focus on delivering value through performance and building a strong team to increase their chances of securing funding.