Female-founded Startups Raise $15.5B, not Good News

Despite raising $15.5 billion this year, female-founded startups face significant challenges that overshadow the positive funding news

According to Pitchbook data, the funding of women-founded companies, including mixed-gender teams, has decreased in the first half of 2024 compared to the first half of 2023.

Specifically, the funding of these companies has decreased by 17%, from $24.8 billion out of $87.7 billion in the first half of 2023 to $15.5 billion out of $93 billion.

2.2% of the venture capital allocated for the year has been raised by companies with all-women founding teams thus far this year.

The data indicates that all-women founding teams have never raised more than 3% in venture capital funding since at least 2014 and that for the past four years, they have raised just about 2% in venture capital funding, even though the amount of capital allocated to U.S. startups has been at record highs.

Kyle Stanford, the lead venture analyst at Pitchbook, informed TechCrunch that companies with all-women teams are experiencing a more difficult 2024, as their activity is significantly sluggish than last year.

“Our data does not necessarily suggest the reason for this, but as investors withdraw to protect their existing portfolios, there is less capital available for investment in new companies,” he stated in an interview with TechCrunch.

The current political climate also challenges investment in women and diverse founders. The June ruling against Fearless Fund underscores this issue.

He stated that the decreasing number of deals indicates the challenges female founders face. In the first half of 2024, venture capitalists supported 372 enterprises with female founders, as opposed to 536 in the first half of 2023.

He continued, “Most female-founded companies are still in the seed and early stages of the VC lifestyle.”

This can be a challenge, as early-stage VC remains difficult, as many companies have struggled to advance due to the increased benchmarks for new financing.

DayDream, a new startup founded by Julie Bornstein, raised a $50 million venture round in June to develop an AI-powered e-commerce search engine. However, there have been some notable breakout successes.

“And if there is a bright spot in the data, it is that venture-growth stage investment in female founders is on track for an annual record high,” he reported.

An example of achievement in this context is Sensi by Romi Gubes.AI, which acquired a $31 million Series B to supervise seniors.

Additional items of positive news are included in the data. Compared to the $900,000 in Q2 2023, funding for companies with all-female founding teams experienced a modest increase in the second quarter of this year, totaling $1.1 billion. Since the $1.5 billion they earned in Q2 2022, these teams have not achieved such a high quarterly figure.

However, the reality is that enterprises with all female founders are still on course to raise approximately 2% of venture capital funding this year.

Kate Bodrova, the founder of the edtech Amazy, stated to TechCrunch that mixed-gender teams frequently receive more funding due to their reputation for providing a broader skill set and a more balanced perspective. She is presently in the process of fundraising and has a co-founder.

Although bias within the VC community is almost undoubtedly a factor, Bodrova maintains that founders (regardless of their gender) should remain focused on growth and the development of a team resume that demonstrates the company is in capable hands rather than attempting to manipulate the system.

“Stay focused on delivering your value through performance,” she advised. “Funding will be forthcoming.”