March 25, 2020
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Women VCs Invest in Up to 2x More Female Founders

By Collin West and Gopinath Sundaramurthy There are numerous reports from Harvard Business Review, Fast Company, Entrepreneur, and Bloomberg that show a lack of gender diversity in startups. At the Kauffman Fellows Research Center (KFRC) we found similar results. We also found that U.S. startups with at least one female founder go on to hire 2.5x more women than startups with all-male founders.Venture capital has a large impact on the overall economy and job growth. However, a recent PitchBook study shows that, even just last year, only “12% of venture firms and angel groups had women in investment decision-making roles.”As such, we wanted to understand how gender diversity at venture capital (VC) firms influences the founders and types of startups that get funded. For our analysis, we looked at nearly 57,000 venture capital partner investments across thousands of firms.This report also includes data from 90,000 venture-backed startups in the United States going back to 2001. We tracked 400,000 employees within these firms, including founders, executives, employees, and members of the boards of directors.Terminology

  • All-Male Founding Team: Startup founding team with only male founders
  • Female Founding Team: Startup founding team with at least one woman founder
  • All-Male Executive Team: Startup C-level executive team with only male executives
  • Female Executive Team: Startup C-level executive team with at least one woman executive

Key Takeaways

  • All-Male Founding Teams close 80%+ of all venture capital rounds, regardless of stage.
  • Female VC partners invest in 2x more Female Founding Teams at the early stages, with the results being more pronounced in Computer Science (63%) and consumer startups (108%).

[ Is this study helpful to you? We have a 3 question survey we'd love your input on. Click here! Your feedback will help our team continue to work on novel research in diversity and inclusion. ]Over 80% of Venture Funding Went to All-Male Founding TeamsIn recent years (2001 to 2018), over 80% of all venture dollars were raised by All-Male Founding Teams (Figure 1). In fact, there is not a single stage of VC fundraising where male founders closed less than 80% of the rounds (Figure 2).[caption id="attachment_7785" align="aligncenter" width="750"]

Female VC Partners

Figure 1. Venture capital raised, by gender of founding team.[/caption][caption id="attachment_7786" align="aligncenter" width="750"]

VC Partners

Figure 2. The proportion of venture rounds closed, by gender diversity of founding teams.[/caption]Furthermore, the $147 billion raised in 2018 by All-Male Founding Teams exceeds the amount of VC dollars put into Female Founding Teams for the last 19 years combined.[caption id="attachment_7787" align="aligncenter" width="500"]

Female Partners

Figure 3. Amount raised in each funding round, by gender diversity of founding teams and executive teams.[/caption]Despite having less overall access to capital as shown in Figures 1 and 2, the data show that founding teams that include at least one woman raise more capital per round than their all-male peers (Figure 3).The difference is most pronounced at Series D where Female Founding Teams raise an additional $5 million (Figure 3).Key Takeaways: Since 2001, 80%+ of all venture rounds and total funds were raised by All-Male Founding Teams. However, when given access to capital, startups with women founders and women in the C-suite go on to raise millions more than their all-male counterparts when measured head-to-head.These numbers can also be found in-depth in our previous research reports, where we looked at venture financing segmented by the gender of founding and executive teams and found that female founding teams raised more than their male-only peers.Women VCs Lead More Rounds that Invest in Diverse Startup TeamsNext, we explored male and female VC investing patterns, broken down by investment stage and by which partners led each funding round.[caption id="attachment_7788" align="aligncenter" width="750"]

Female Partners

Figure 4. The proportion of funding rounds, segmented by stage, lead VC partner gender, and gender diversity of startup founding teams.[/caption]Female VC partners lead noticeably more early rounds in Female Founding Teams than their male VC counterparts. Figure 4 shows that at the Seed stage 32% of women partners’ investments are in Female Founding Teams, compared to only 16% of male VC leads; in other words, women VCs invest in twice as many female-founded startups as their male counterparts at the earliest stage of company development.At Series A, women VC partners have approximately a 25%/75% split between women founders and all-male founders, whereas male VCs have a 12%/88% split; again, twice as much.[ Is this study helpful to you? We have a 3 question survey we'd love your input on. Click here! Your feedback will help our team continue to work on novel research in diversity and inclusion. ]We believe the reasons for this increased investment may include women having personal experiences that male investors would not, which in turn helps them identify overlooked problems and understand their market size.The data show that female venture capitalists are dramatically increasing the chance that a women-led startup raises money and gets a shot at building a category-defining company.Key Takeaways: At the early stages of a startup, female VC partners lead nearly 2x more financings in Female Founding Teams.Female VC Partners Consistently Back More Female Founders Across Sectors We then inspected venture capital partnership structures to see if there were discernible differences between the investment patterns of male and female VC partners across sectors.[caption id="attachment_7790" align="aligncenter" width="750"]

Female VCs

Figure 5. Funding rounds, segmented by industry, lead partner gender, and startup founding team diversity.[/caption]As shown in the light-blue bars of Figure 5, the vast majority of VC portfolios are comprised of startups with All-Male Founding Teams. Having said that, there are two areas that we would like to highlight.First, there is a large gap between the investing of male and female VC partners in technology startups (Computer Science/Healthcare): Women VCs back female tech founders 63% more often than male VCs do (Figure 5).Second, we see a 108% lift in the number of female-founded consumer companies backed by women VC partners compared to male VC partners (61.8% versus 24.3% in Figure 5).This dramatic difference is likely supported by the fact that women make the vast majority of U.S. consumer spending decisions, particularly in terms of food, fitness, beauty, and apparel (source).Key Takeaways: Women VC partners lead to more Female Founding Teams getting financing, particularly in Computer Science (63%) and Consumer (108%) startups.ConclusionThe results are clear: Women VC partners invest in more female founders than their male counterparts. These findings are consistent across startup industries, with pronounced differences in Computer Science (63% increase) and Consumer (108% increase) startups.Moreover, we find that women VC partners lead twice the number of Seed and Series A investments in Female Founding Teams. And that is key—female VCs are giving women-led companies a chance early in the startup journey.Today, there are over tens of thousands venture capital investment partners, of which around 15% are women.Our findings are consistent with the broader research.PitchBook All Raise 2019 found that teams with at least one female founder exit faster (6.9 years versus 7.4 years for all-male teams) and are growing faster at the time of exit.Furthermore, a review of First Round Capital’s first 10 years found that “companies with a female founder performed 63% better” than their investments into all-male founding teams.Previous Kauffman Fellows research also shows that a startup with a female founder and female executive will go on to hire 6x more women than teams with all-male founding and executive teams.Lastly, diverse startups are better for the consumer as well. Today, women make or influence 70-80% of the purchasing decisions in the United States. It only makes sense to have the decision-maker at the VC fund, the startup, and the consumer levels are more closely aligned.Ultimately, we need more diversity of thought in venture capital if we want to create a proliferation of startups solving problems that move the needle. In this case, the right decision for consumers, employees, and founders is the same: Invest in hiring, training, and promoting more female venture capitalists. Otherwise, we as an industry are leaving money on the table.As the data above show, one small step for VC partner diversity equals one giant leap for female entrepreneurs and the entire startup ecosystem.Is this study helpful to you? We have a 3 question survey we'd love your input on. Click here! Your feedback will help our team continue to work on novel research in diversity and inclusion.

Kauffman Fellows


All the data used in the development of the charts and insights included here were obtained from Crunchbase private-market data. Specifications of the analysis include the following:

  • Venture rounds include US-based firms between 01 January 2000 to 31 December 2018.
  • Venture rounds excluded from our analysis include debt, LBO, exits (IPO, M&A), crowdfunding, etc.
  • Firms with at least one woman founder are referred to as Female Founding Teams. All other firms are marked as All-Male Founding Teams.
  • Firms with at least one woman C-level executive are referred to as Female Executive Teams. All other firms are marked as All-Male Executive Teams.
  • Venture rounds that did not contribute to dilution were resolved with previous rounds and then excluded from the firm’s round count.
  • Our analysis was similar to those published with other datasets, such as NVCA-Venture reports published by Pitchbook.
  • Only male and female genders were included in the analysis.
  • Executives with “founder” (case insensitive) in their titles were tagged as founders.
  • If the firm only had all-male founder(s), then it was marked as an all-male founded firm.
  • If the firm had at least one female founder, it was marked as a female-founded firm.
  • Executives with titles including “ceo,” “cto,” “cfo”, “cio,” “chief,” “coo,” “cro,” “president,” “co-owner,” and “cdo” (case insensitive) were marked as executives.
  • If the firm only had all-male executives, then it was marked as an All-Male Executive Team.
  • If the firm had at least one woman with the above titles, it was marked as a Female Executive Team.
  • Crunchbase’s disclaimer for gender data: “Crunchbase’s dataset is constantly expanding, but there are gaps. A company may not have founders listed on its Crunchbase profile. Or Crunchbase might not have a gender listed for founders that are attached to the person’s Crunchbase profile.  (Note: In addition to “male” and “female,” Crunchbase has over two dozen other gender tags.)