Female Founders: Representation Matters
This article was originally published at:
https://medium.com/fisv/female-founders-representation-matters-6599321dbcf1
2021 marked a record year for female founders
Last year, Bumble, a dating app where women make the first move, went public and shook the stock market, making Whitney Wolfe Herd, Bumble’s founder, the youngest female CEO of a publicly traded company and the youngest self-made female billionaire. Meanwhile, Melanie Perkins has been leading the world’s most valuable female-founded and female-led start up, Canva, a graphic design platform, since September, when its valuation hit $40 billion after a successful round of funding.
Amid the flurry of activity that 2021 brought, the data shows start-ups with female founders raised more funding and executed more exits at greater values last year than at any point in the past decade. As highlighted in the infographic FISV produced for International Women’s Day this year, by the end of 2021, female-founded fintech companies had raised over $6.4 billion in venture funding. 83% higher than the total raised by all-female companies in 2020 and a record by more than threefold¹. That is, an exciting enough milestone for the New York Times to close 2021 proclaiming, ‘Funding for start-ups founded by women is surging’.
Yet, as our IWD2022 infographic also highlights, the deeper you dive into the data, the bleaker these milestones start to look when taken into context.
It’s all relative
Despite record levels in 2021, investment activity in female-founded companies represented but a small slice of the overall market. According to Pitchbook, of all the money invested across VC-backed start-ups in 2021, just 2% went to teams with all-female founders while only 17% went to teams with at least one female founder².
Meanwhile, the Covid-19 had a disproportionate effect on funding for female founded companies in 2020 to the extent that where investment activity for all-female-founded companies dropped and stagnated at 30% in 2020, it dropped 5.4%, at its lowest, for all-male founded companies during the same time period. And this is before diving into what the stats look like for minority women.
Representation matters
How are there only 20 active publicly listed companies in the US that were led through to IPO by a female founder³? Where are all the Whitney’s and Melanie’s and why aren’t they getting funding?
There is no quick fix for redressing the imbalance in funding for female founders. For one, it doesn’t matter if there aren’t enough women making pitches, if there aren’t enough women at the table to hear and fund them. Representation on both sides of the table matters because connection and shared experiences matter.
There’s much work to be done. We have been inspired by the shocking statistics to reflect on how we can take real action and play our part in closing the gap to true equality in access to funding.
As a VC fund, our outlook is fourfold: how we work with our portfolio companies to improve their diversity strategies, how we can better support our female founders, how we can play a part in breaking down the barriers to entry for potential female founders, and how we can give access at a grassroots level to diverse candidates who are interested in a VC career.
