The disproportionate impact of the pandemic on women extends beyond layoffs and women leaving the workforce, to the venture capital funding of female entrepreneurs. During the past year, the amount of funding to women-led startups and startups led by co-ed teams declined, as the overall amount of venture dollars poured into startups inched higher.
Startups with all-female founding teams drew an all-time-high 3.4% of all venture capital dollars in the U.S. in 2019, according to Crunchbase. That declined to 2.4% in 2020, and that percentage has stayed consistent through the first two months of 2021, according to Crunchbase, which notes that it's still gathering data on deals closed in the past few months so numbers through February may change.
But it's not just female founders who suffered; companies with co-ed founding teams saw their share of venture dollars decline from 11.6% in 2019 to 10.8% in 2020, to 10.3% at the beginning of this year. The startups that have drawn a larger share of VC dollars are those with a team of all male founders: from 85% in 2019 to nearly 87% in 2020, to over 87% at the start of this year.
So why are women getting a smaller piece of the pie? Crunchbase's senior data journalist Gene Teare points to the fact that male-founded companies are more likely to draw larger funding rounds, in part due to being older and more established. Women have drawn an even smaller piece of the startup pie in prior years, giving newer women-founded companies an even larger funding gap to contend with.
In fact, PitchBook reports that the average size of a VC deal for all-female teams was $6.8 million in 2020, compared to $18.7 million for all-male teams. But PitchBook notes that there are more deals going to female founders in February 2021 than in February of last year, so it's possible that the numbers, as they come in, will start to tick higher.
Another factor at play: only 12% of decision makers at VC funds are women, according to All Raise. Predominately male investors may have been more inclined to stick with their current networks during the pandemic, and less likely to meet new entrepreneurs.
Still there are reasons for hope: if investors are tracking the trends, they may see the value in backing female founders. Teams comprised entirely of female founders exist (sell or go public) faster, in less than 7 years on average, compared to the nearly 8 years on average it takes all-male-founded teams to exit. And female founders sell or go public at higher valuations, on average. And a number of new, female-founded VC funds have launched in the past few months, with a specific focus on tapping into the often overlooked opportunity in backing diverse founders.