In a Banner Year for VC, Women Still Struggle to Get Funding

Venture capitalists have broken records every quarter this year, pushing more money into the startup ecosystem with bigger and bigger deals. Amid this funding frenzy, some female-founded companies are raising “mega rounds,” including Tia Health ($100 million), Maven Clinic ($110 million), and Insitro ($400 million). Overall, startups with a woman founder raised $25 billion in the first half of 2021—more than the total amount raised by women any full year prior.

It can seem like a moment of triumph for Silicon Valley, which has long been called a boy’s club. But percentage wise, the amount of venture capital going to female entrepreneurs is lower in 2021 than it has been for the last five years. That’s especially true for startups with all-female founding teams, which have raised just 2.3 percent of venture capital this year, according to Crunchbase. Startups with mixed-gender cofounders raised 11.7 percent of funding. In other words: 86 percent of venture funding still goes only to men.

“We’re coming off of three historic years of deployment of venture capital, so in the macro the landscape does seem to be better. But it’s not really,” says Pam Kostka, the CEO of All Raise, a nonprofit that supports female entrepreneurs. Funding numbers have been “flat at best,” with some groups receiving less year-over-year: A report from Project Diane found that Black and Latina female founders received 0.43 percent of venture funding in 2020, down from 0.67 percent the year before.

The venture capitalist Aileen Lee inspired the group that would become All Raise, which advocates for female entrepreneurs.

Photograph: Brian Ach/Getty Images

Women in the industry have been scratching their heads about how to improve these statistics for years. While not an even split between genders, women still start businesses in far greater numbers than their share of VC funding would suggest. In 2017, the investor Aileen Lee emailed a few dozen women in venture suggesting they band together to work on the problem. The email group grew into an informal support group, which later became All Raise, whose mission is to increase both the number of women in VC and the total VC funding to female founders. When it launched in 2018, All Raise’s goal was to see about a quarter of VC dollars going to female founders. But since then, the number has hardly budged.

This year, in particular, has left some female founders feeling left out of a historic venture bonanza. “When you’re reading these headlines about record rounds, you have to ask, who is having this experience?” says Liz Giorgi, the cofounder and CEO of Soona Studios. “It’s certainly not the women I know.”

WIRED spoke to 10 female founders who raised venture capital in the past year. While these women have all succeeded in fundraising for their startups, many of them said that they felt they were held to a different standard, or were subjected to sexist lines of questioning. This was particularly the case in the early stages, when investors have fewer metrics to go off of, and write checks based on their gut feeling about a founder.

“It’s that first round, when you’re an unknown quantity,” says Maria Colacurcio, the CEO of Syndio, an HR analytics company. When Colacurcio raised her Series A, in 2020, she felt confident about the company’s metrics, including its annual recurring revenue. She also felt good about her track record: She’d cofounded the software company Smartsheet, which went public in 2018. But when she met with VCs about Syndio, most of them told her they would need to wait until she could show the company’s metrics year-over-year. That surprised Colacurcio, who had heard of plenty of startups getting millions of dollars without a product at all.

Kostka, from All Raise, says she hears this complaint from women all the time. “We see men with a concept on a napkin who can raise $10 million, and women with $5 million in annual recurring revenue still can’t raise a seed round.”

In her early meetings, Colacurcio says she was judged on her startup’s defensibility, rather than her future vision. In 2018, Harvard researchers observed a similar phenomenon: Investors tend to ask men about their startup’s potential gains, and women about their potential losses. As a result, the researchers concluded, the startups with male founders raised five times as much as those with female founders.