How are women faring amid the venture capital and startup slowdown? New data paints a somewhat uneven picture, albeit one that tilts toward the negative.
Startups are a global business, as is the work of backing them financially. This means that while we often observe aggregates — this dataset marking what could be an all-time peak, for example — we also look at smaller slices of funding activity to better understand who is raising capital and where.
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After a strong 2021 by several metrics, how are women founders faring in the United States? America remains the leading startup fundraising market, which means that as women raise there, so too go the global numbers, making U.S. data regarding women founders more than a little critical.
Thankfully, the United States also has one of the most developed reporting industries tracking venture data, so we have both granular and long-trailing data on the state of affairs. So let’s examine Q2 and H1 data from 2022 concerning the performance of women founders in both mixed-gender and all-women teams to get a better handle on how they are succeeding — or not — in raising capital in a falling market.
Circling the wagons
As market conditions worsen, investors often become more conservative. This can mean that private-market deal-makers, when they circle their wagons to defend portfolio companies and capital, may be most inclined to cut net-new checks to folks in their existing networks — people who tend to have had similar paths in life. This can mean that women and people of color often experience harder fundraising conditions during more choppy economic periods. Like the one we are in now.
So are women raising less capital than before? Yes, according to a PitchBook dashboard of data. But there is some nuance:
- The Good: PitchBook writes that the $20.8 billion that women founders raised in H1 2022 was “more than 93% of the deal value raised in the first half of 2021.” Indeed, the first two quarters of this year were the third richest half-year period on record for women founders. Even more, the portion of deal count in 2022 that went to founding teams composed exclusively of women ticked up to 6.9% from 6.6% in 2021, reaching a new record.
- The Bad: The portion of rounds going to mixed-gender teams has fallen thus far in 2022, and more than the gains we saw among all-women founding teams. From 2021 to 2022, the percentage of venture capital deals that included at least one woman founder (i.e., a mixed-gender founding team) fell from 19.4% to 18.2%, PitchBook reports. In capital terms, women are raising less as a portion of total capital. Mixed-gender founding teams stayed essentially flat at 15% of capital raised in both 2021 and 2022 thus far, while all-women teams fell from 2.4% last year to 2.0% so far this year.
There is even more bad news if we look at the data on a quarterly basis rather than in half-year chunks. Deal volume for startups founded by all women or mixed-gender teams peaked in Q1 2021 (1,115 deals) before plateauing at just over 1,000 through Q1 2022. Then, last quarter, the number fell sharply to 799. Capital invested into the same cohort in the United States peaked at $15.6 billion in Q3 2021, falling over the next three quarters to just $10.4 billion last quarter.
This is a very much glass-half-empty/glass-half-full moment. Yes, several indicators are pointing downward from their prior highs. At the same time, startups that had at least one woman co-founder raised double their H2 2020 number in H1 2022, which underscores not only how much the venture capital market has grown but also how little capital women were raising very recently.
Despite the year-on-year decline in the first half, years of hard-fought gains are not disappearing overnight. PitchBook data indicates that in 2008, men-only teams in the United States captured 88.2% of deals and 91.7% of deal value. In 2021, men-only teams raised 74% of the rounds worth 82.7% of capital. This year’s 75% of all funding rounds going to all-men teams (along with 83% of all capital raised by startups in the United States) are a backslide, yes, but not one that brings things back to zero.
There’s a lot more to do to make the venture capital and startup worlds more equitable. And it’s too bad that it appears we’re going to spend a year losing what little progress we’ve seen. Let’s see if things can turn around in Q3.