Where are all the Women Founders? A Closer Look at the Startup World Gender Gap
The reason for the lack of women-founded startups is explained by a woman founder.
As a woman founder who has worked closely with other startups for 15 years, I have spent most of my career dedicated to exploring this question. Here’s what I discovered:
At the foundational level, the lack of women-run startups comes down to the lack of venture capital funding women founders receive at their startup’s earliest stage. According to my research and by cross-referencing stats in Crunchbase, on average, for every 1,200 startups that VCs look at, they invest in 5 men founders and only 1 woman. Only 2% of venture capital funding went towards women-founded startups in 2021 and only 15% towards male & female co-founded companies–that equals only $18.7 billion out of $110 billion invested globally. And so far in 2022, the numbers seem to be trending the same, sadly showing no improvement. You can see that from the start, women entrepreneurs are up against tremendous odds just to get their idea out the door.
“On average, for every 1,200 startups that VCs look at, they invest in 5 men founders and only 1 woman.”
Despite the recent rise in female-founded investment firms, the VC ecosystem is still heavily controlled by men and there has been little movement in the amount of VC dollars going to women in the past decade. Women still only make up 11% of investing partners at VC firms and their money alone is not enough to balance the playing field. At the rate we’re progressing by using our current tactics, it will take two and a half centuries for female fund managers to achieve equal status to their male counterparts. This gender imbalance at the VC level directly impacts the startups that get funded since women VCs are twice as likely to invest in women founders.
Because there is so much less funding going towards women-founded startups than men’s, there are in return, fewer companies launched from a woman's perspective. Research has shown that when women-led teams set out to solve a problem, they solve for both male and female-oriented conditions; men are more likely to solve for only males. This fuels the cycle of gender inequity in important industries like women’s Health & Wellness, Parenting, and EdTech.
“…when women-led teams set out to solve a problem, they solve for both male and female-oriented conditions; men are more likely to solve for only males.”
The root of the problem
Until funding is equitably distributed between men and women-founded startups at their earliest stage, a systemic imbalance in leadership, innovation, and products will continue to multiply gender inequality exponentially as only the funded companies grow. The problem-solving needs to begin there — at the root.
For tips on where to start, read my next blog post: ‘3 Things Women Founders can do Pre-Seed to Increase Their Chances of Raising VC Funds’.
I’d love to hear your thoughts on this topic. Drop them in the comments below!
Nicole Gallardo has almost 2 decades of experience designing digital products that grow businesses and serve communities. She is the Founder & Chief Design Officer at Founders Who UX, an EdTech company offering immersive UX/UI programs that help founders and their teams design the right product for the right people.
