Business Diversity

These Are The Leading And Lagging States For Female-Founded Startups

Illustration of woman working on a computer.

Female-founded companies account for less than one-fourth of venture funding recipients in every U.S. state with a startup scene. But they’re a lot closer to the top of the spectrum in some states, and much nearer to the bottom in others.

That was the finding from a state-by-state analysis of funding over the past three years to companies with at least one female founder. We focused on 25 states that collectively account for  over 95 percent of total U.S. funding rounds. 

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Overall, across all states, companies with at least one female founder pulled in 15 percent of funding rounds and 11 percent of total investment. Representation by selected states ranged from a high of 23 percent of funding rounds to a low of 5 percent.

Way to go Minnesota

Who came out on the high end? Minnesota led as the state closest to the top for both percentage of funding rounds and total raised. Twenty-two percent of funding rounds went to female founded companies, which pulled in 21 percent of total investment.

Next up was Oregon, with female-founded companies accounting for 23 percent of rounds and 12 percent of invested capital. Beyond those two states, Michigan and New York also stood out for above-median representation of funded female-founded startups.

For a fuller state-by-state breakdown, we charted 25 states below, looking at the percentage of rounds and total investment that goes to companies with one or more woman founders.

Utah? Not so great

Who was at the bottom? Utah was the laggard by a long shot, as the most underrepresented for female founders. The state ranked last for both percentage of female founders among funded companies that raised $1 million or more and for total investment to female founders

Of the five largest states for venture funding, meanwhile, Texas and Washington were below average for investment rounds in female-founded companies, though not by a huge margin. And California, the largest state by far for overall investment, was slightly above-average when it came to representation of female founders in funding rounds. 

Company count by state

For another way to dice up the data, we put together a chart showing the breakdown of funded, female-founded companies by state. Companies on the list are seed and VC-funded ventures that received funding in the past three years, with total investment of $1 million or more.

Reading into the numbers

For many states, just a single or small number of larger funding rounds for female-founded companies can play an outsized role in pushing up investment totals. Thus, it might be imprudent to read too much into the state-by-state differences.

Additionally, most states on the list are within a few percentage points of the median for the share of rounds going to female-founded startups. It’s unclear in most cases if the differences are just random chance or due to differences in the startup ecosystems and regional talent pools.

However, there are a few outliers. It’s worth considering if there are factors in the Minnesota and Oregon startup scenes that favor female entrepreneurs. By the same token, it looks as if Utah has some work to do to improve prospects for female-founded companies looking to secure funding.

Illustration: Dom Guzman

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