The Venture Capital Industry Doesn’t Care About Female Founders

15 February 2023 | Newsletter

Welcome to The Fight for Fairer Funding newsletter where we share the latest in the fight for fairer funding in investment, raise awareness and provide education in line with our Mission. This newsletter from Funding Focus founder, David B. Horne, is part of the platform that sheds light on the uneven playing field that female and under-represented entrepreneurs of all genders face when it comes to raising capital for their businesses. We hope you enjoy it!

Read our latest edition below.

That’s a provocative statement

One that I made at an event the day after International Women’s Day in the NatWest Conference Centre in Bishopsgate, London. I was in the audience, and it was the opening phrase of a question I asked of the panel. There was an energetic exchange with one panellist, who said it certainly wasn’t the case, and then the conversation moved on. During the coffee break, more than a dozen women came up to me, saying that they agreed with me. That the VC industry doesn’t care about female founders.

In conversations with many VCs, they claim to be interested in female founders and in the same breath claim there isn’t enough deal flow. I don’t believe them. If 5% of all pitchdecks are submitted by female founders, how come they have never received more than 3% of funding — and in most cases much less than that. Someone must be getting the deal flow, or the math doesn’t stack up.

To be fair, I know a few VC firms which invest in women as their underlying strategy. Firms like Astia, Female Founders Fund, BBG Ventures and January Ventures. All of them are focused on businesses in the USA, with more than 90% of their investments being made in American companies. Perhaps that explains why the share of funding to female founders in 2022 was 2.1% in the USA compared to 0.9% in the UK and Europe. Either way, it’s not moving the needle.

Why do I make such a provocative statement?

Because it needs to be made. Let’s look at the statistics. Based on data published by PitchBook, going back 15 years to 2008, we see:

  • The share of funding to all-female teams in the UK and Europe has never broken through 3%, and only twice in that 15-year period has it been more than 2% — in 2008 it was 2.8% and in 2010 it was 2.5%. In 2022 it fell below 1% for the second time.
  • Moving across the Atlantic to the USA, again it has never broken through 3%, the peak being 2.9% in 2009. In 2022 it was 2.1%, the second lowest over the 15 years (in 2016 it fell to just 1.7%).

Across that 15-year period, the percentage of pitchdecks submitted by all female teams has grown steadily. That’s the deal flow the VCs are saying isn’t happening. It just doesn’t stack up. Every year the share of pitchdecks submitted has been increasing, so the deal flow must be out there somewhere, but the share of funding has in fact fallen from where it was in 2008 to where it is in 2023. What’s going on?

In the last few years there have been major initiatives like the Alison Rose Review of Female Entrepreneurship. There have been research articles published by Boston Consulting Group, McKinsey and other reputable organisations which clearly show that businesses with at least one female founder outperform male-led businesses by a statistically significant margin. There has been the implementation of the Investing in Women Code in the UK, which by the way at the end of 2021 had NOT been signed by 73% of the members of the British Venture Capital Association.

I’ll repeat my provocative statement: the venture capital industry doesn’t care about female founders. And the real problem is, in their minds they don’t have to. Their goal is to make money for their investors and for themselves, and a very large number of them do just that. Why should they change?

The solution isn’t to try and change the venture capital industry. It doesn’t want to change.

The solution is to build a new kind of investment fund. One that is not myopically focused on finding the next unicorn to offset the majority of VC investments that go bust or end up as zombie companies not really doing anything. A fund that invests in businesses that are focused on sustainability, community and solving real-world problems, not the latest fad of a few tech geniuses. That’s the fund I’m trying to build with Funding Focus Investment Trust plc. A fund that is transparent, that communicates openly and that works with female founders to scale successful businesses that will, in their own way, make the world a better place. A fund that DOES care about female founders.

It’s not going to be easy. I know, because I’ve been trying to launch it for more than a year now. I’m reminded of Macchiavelli’s quote from The Prince:

“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the innovator has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries … and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it.”

I’ve said it before and I’ll say it again: I’m up for the challenge.

As always, looking forward to reading your thoughts on this in the comments.

With love and gratitude,


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