- Startups led by women attract more venture capital, but gap remains wide
- Opportunities for non-technical female entrepreneurs are growing, Partech says
- While the overall number of female-led startups getting cash increased, the percentage of dollars invested remains stagnant
Female-led startups are attracting more venture capital investors, but progress toward gender parity in acquiring funding remains slow.
The overall number of companies with a female founder that raised an initial funding round in the last five years almost doubled to nearly 9,900, according to a Crunchbase report. Even so, only 3% of invested dollars went to female-only founders in 2019, the same percentage as in 2010, Crunchbase said.
“Just getting in the door is hard,” said Kai Frazier, founder and CEO of Kai XR, a virtual-reality learning startup. She says that, as a black woman, she has been at meetings with potential investors where “my CTO was a white man so they wanted to talk with him rather than me.”
That attitude may shift after several large Wall Street players this year threw their weight behind the move toward more gender representation at the top. Goldman Sachs has said that it would stop doing IPOs of companies in which white males fill all board seats, while BlackRock is also pushing for more women and minorities to be added as directors. The moves may create a new standard for diversity, Shannon Gordon, CEO of theBoardlist, told Karma.
Frazier, whose company received a shout-out from Steve Harvey, said her big breakthrough came when Mozilla backed her as a case study to learn more about education and virtual reality. Now, she is in the midst of a funding round that she hopes will net between $500,000 and $1 million.
Still, she said, she is focused more on generating revenue through subscriptions and making VR films for clients like the Negro Leagues Baseball Museum.
Romain Lavault, general partner at global investment firm Partech, told Karma that technology has helped open doors to female entrepreneurs.
A decade ago, many of the start-ups he saw were led by engineers who were building and putting into place technology. The percentage of female engineers was very small. Today, with so much more technology in place, there are more non-technical founders. That has led to more opportunities for women, Lavault said.
If you have a great idea, “you don’t need to code it yourself,” he said. “You can hire someone to do the coding.”
Moreover, Lavault said he also expects that VC firms themselves will become more diverse, since they tend to hire people who have started their own companies — and there are more female founders now. That will mean more women making decisions on where to invest cash.
Even so, he cautioned, he doesn’t expect the gap between male and female founders to “equalize soon.”
The deadly coronavirus pandemic is likely to set the move toward gender equality back, a number of female VC investors have said.
“The economic fallout of COVID-19 could prove harder on women than men, especially if investors retreat into what they might perceive as safer and more familiar investments,” wrote Christine Tsai, CEO of the venture capital firm 500 Startups.
Others were blunter.
“Lots of VC talk about limiting dealmaking to ‘existing relationships, experienced operators’,” tweeted Heidi Patel, managing partner at Rethink Impact, a firm that invests in social-impact companies with gender-diverse management. “Read — if you don’t fit the mold, don’t bother applying.”