The Purse

Venture capital has been surging, but female founders are not experiencing an uplift

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Venture capital has been surging, but female founders are not experiencing an uplift

Jana Hlistova

Jul 07, 2024

Transcript

Welcome to our #243 weekly newsletter.

“For women taking control of their financial future”

-Jana Hlistova

From The Purse

In this week’s newsletter, we focus on Pitchbook’s data on female founders in the US and Europe.

Female-founded startups secured 2% of the total VC capital in 2023, the lowest since 2016. But European female-founded companies with at least one female founder generated a record high proportion of total VC deal value at 20.5% and deal count at 25.8%.

However, angel investment participation by female investors has declined by almost half in 2023, which has impacted deal flow for female-founded companies.

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And you can review the news in brief so you stay on top of global financial, economic and investing trends.

I hope you enjoy this week’s newsletter.

Until next week,

Jana

Venture capital has been surging, but female founders are not experiencing an uplift

They say that ‘change is not linear’ and female founder capital raising was more challenging in 2023, on average, than in recent years.

This is despite venture capital funding overall surging in recent years.

However, VC funding for female-founded or co-founded companies has been trending up in recent years, and 2023 saw the creation of several women-led funds, incubators for female founders and more new companies.

Here is a summary of the key stats on US/European female founders in 2023 from Pitchbook:

Key Stats:

Overall VC Funding Trends:
- Female-founded startups secured 2% of the total VC capital in 2023, the lowest since 2016.
- Companies with both male and female founders received 20.7% of the total US VC funding, the highest on record.
- Mixed-founder companies raised approximately 33% more capital than in 2020 but completed fewer deals.
Industry Breakdown:
- Female co-founded startups saw significant funding in sectors like B2B services and pharmaceuticals/biotech, with B2B services accounting for 27% of all capital raised for these startups.
- Female-only founded startups received notable funding in software, contributing over a fifth of the total capital invested in both female-only and mixed-gender founder groups.
Exit Activity:
- Exit activity for female-founded companies declined to its lowest since 2016, although those that did exit accounted for a record 23.3% of total exit activity.
- The cumulative exit value for female-founded companies decreased by more than one-third year-over-year.
Valuations and Deal Counts:
- Pre-money valuations for female-founded companies have increased significantly over the past decade, with three-quarters of all venture rounds in 2023 based on higher valuations than previous rounds.
- Female-founded companies closed more deals than any pre-pandemic year but recorded the lowest annual deal value since 2017.
Regional Insights (Europe):
- European female-founded companies with at least one female founder generated a record high proportion of total VC deal value at 20.5% and deal count at 25.8%.
- Angel investment participation by female investors has declined by almost half in 2023, impacting deal flow for female-founded companies.

What next? (Re) listen to The Purse Podcast:

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