U.S. startups with mixed-gender founding teams — meaning they have at least one female founder — raised $24.1 billion in the first half of 2023, which breaks down to $17.2 billion in Q1 and $6.9 billion in Q2, per the latest PitchBook data. The expectation is that funding to such companies will reach its second-highest total ever this year.
That’s a big deal, with PitchBook expecting the amount of capital allocated to mixed-gender teams this year to overtake last year’s sum. H1 2022 saw companies with founders of both genders raise $26.8 billion; they subsequently closed out the year with a total of $43.3 billion raised, which holds the current record as the second-highest amount of capital allocated to mixed-gender teams. The first was in 2021, in which such companies raised $59.6 billion overall.
Mixed-gender teams picked up 28.1% of capital raised in H1, which is up from raising 16.9% in H1 2022.
But startups with all-women founding teams are struggling to raise money this year and have picked up only $1.4 billion in H1. That’s $800 million in Q1 and $600 million in Q2. The last time companies with all-women founders raised such a low H1 amount was in 2017, when they picked up $1.2 billion. All-female-founded startups raised $3.1 billion in H1 2022, $4 billion in H1 2021 and even $1.8 billion in H1 2020.
With the venture market in retreat compared to prior highs, we need to understand how the ratio of capital raised by all-women-founded startups is evolving. All-women founding teams raised 1.6% of the capital allocated this H1, which is only a tad lower than H1 2022, when they picked up 1.9%. Regardless of the total amount all-women teams raise, the number rarely swings beyond 2%. It appears that the presence of a man on the team dramatically increases the amount of funding a woman founder receives.
To see the all-women founding team venture numbers shrink in both absolute and comparative terms indicates that while venture capital firms have made noise about investing in a more diverse founder set, those pledges have yet to come to fruition.
There are a few reasons why women don’t get as much investor interest as men, and none is surprising: extreme gender bias, starting at the pitch stage. For example, VCs ask women “prevention” questions on what could go wrong, while men typically get asked “promotion” questions regarding what could go right, according to Harvard Business Review.
Elina Valeeva, the co-founder of the health app Essence, said she’s also noticed that investors tend to have fewer biases toward mixed-gender teams. Her co-founder is a man and she said, for example, that she’s never been asked on a call what would happen to her startup if she decided to have a baby. But her friend, who is a solo female founder, has been asked the question.
“It feels like investors feel more secure that if [I do have a baby], the startup remains ‘in good hands [with a man there],’” she told TechCrunch+.
There are some sectors where all-women teams really stand out, however, according to PitchBook data. Such teams usually find the most success in the software industry, followed by healthcare and business-to-business services. Mixed-gender teams tend to fare well in software, healthcare and pharmaceutical sectors.
“The wealth transition in the West towards women also makes us optimistic about the future,” Samira Ann Qassim, the co-founder of Pink Salt Ventures, told TechCrunch+. “Because women are two times more likely to invest in other women.” Though that comes with its own set of hurdles: Women-founded startups that raise money from all-women teams are less likely to receive additional funding.
Reducing gender bias will take a societal shift, but it’s not an impossible feat to achieve. Valeeva said she’s even starting to see some investors become less biased toward women-founded companies. “I used to hear more examples that they were reluctant to invest in female founders because ‘we’ve already invested in a female founder, her startup failed, and we won’t do it again,’” she said. “Now I sense that this perspective is shifting.”