In 2023, female-founded companies in the United States secured a significant portion of the venture capital allocated, but the trend shows that women founders still face challenges in fundraising.
Venture Capital Allocation to Female-Founded Companies
According to recent data, female-founded companies raised $44.4 billion out of the total $170.59 billion in venture capital allocated last year. This represents a significant jump from previous years, but the percentage of funding allocated to women founders has dipped slightly.
Decline in Funding to Women Founders
The percentage of venture capital allocated to all-women founding teams decreased from 2.1% in 2021 and 2022 to 1.8% in 2023. This is the lowest percentage since 2016, when women-founded companies received 1.6% of all venture funds.
Mixed-Gender Founding Teams See Significant Increase
On the other hand, mixed-gender founding teams saw a significant increase in funding allocation, securing 26.1% of all venture capital allocated in 2023. This is a substantial jump from the 18.2% they received in 2022.
Reasons for Decline in Funding to Women Founders
Kyle Stanford, lead VC analyst at PitchBook, attributes the decline in funding to women founders to the broader market trends. "Venture has had several tough years, and capital availability in the market has declined significantly," he said. "The VC market saw declines of nearly 20% in deal count and 50% in deal value between 2021 and 2023."
Context of Market Difficulties
Stanford emphasizes that the decline in funding to women founders is not unique to this demographic. "It’s not meant to make activity in female-founded companies look better, but the context of market difficulties is important," he said.
Deal Count and Value for Female-Founded Companies
Despite the decline in percentage, less than 25% of all deals went to female-founded companies in 2023. The most popular category was software, with around $8.4 billion invested, followed by B2B, SaaS, and pharmacy and bio.
Top Cities for Female-Founded Companies
New York City takes the top spot for where women receive the most deals, followed by San Francisco and Los Angeles. "While it has been a large market for a while, it is beginning to close the gap with the Bay Area in terms of investment count activity," Stanford said.
Challenges Faced by Women Founders
Women founders attest that this has not been an easy year for fundraising. Dina Majzoub, founder of animal healthcare company Vidapet, shared her experiences: "As a woman in tech, I’ve faced many challenges in securing funding. It’s essential to have a strong network and be prepared to address biases."
Conclusion
While female-founded companies have made significant strides in securing venture capital, the decline in percentage highlights the ongoing challenges women founders face in fundraising. As the market continues to evolve, it is crucial for investors, policymakers, and industry leaders to work together to create a more inclusive ecosystem.
