Editor’s note: This article is part of Something Ventured, an ongoing series by Crunchbase News examining diversity and access to capital in the venture-backed startup ecosystem. Access the full project here.
Venture firms in the U.S. founded by women are on track to raise more than $7 billion in 2021— almost $1 billion more than the prior peak of 2019 and up 59 percent so far year over year, Crunchbase data shows.
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U.S. venture capital has raised record funds in 2021, at $96 billion through the third quarter, according to a Pitchbook/NVCA report. That compares with $86.8 billion in 2020, a prior record in the past decade.
The proportion raised by female-founded firms through the third quarter of 2021 represented more than 7 percent of the total raised by U.S. venture firms, a higher proportion than 2020, but lower than percentages from 2017 to 2019, according to Crunchbase figures.
Larger funds
Funds in the $100 million to $500 million range have grown the most year over year and represent the largest proportion of funds raised by female-founded funds through the third quarter of 2021 at $3.9 billion.
Investing in women
How do female-founded firms fare when it comes to investing in female-founded startups?
We analyzed U.S. female-founded venture firms and found 28 percent of deal counts from 2016 to October 2021 were in startups with at least one female founder. That proportion dropped to 22 percent of deals for male-only founded U.S. venture firms.
A minority of male-founded firms have female partners. According to All Raise, a group that advocates for more women in the venture ecosystem and a greater proportion of funding to female founders, female partners represent 13 percent of partners at U.S. venture firms with funds above $25 million, and 64 percent of the firms have no female partners.
Second funds dominate
Crunchbase figures show second funds represented the majority of funds–52 percent–raised by female-founded firms through the third quarter of 2021.
Bond, which spun out of Kleiner Perkins to invest at growth in September 2018, has raised the largest fund this year at $2 billion. This is an all-time peak for a U.S. female-founded venture firm, co-founded by ex-Wall Street analyst Mary Meeker, along with former Kleiner colleagues Mood Rowghani, Noah Knauf and Juliet de Baubigny.
The firm has made 46 investments, per Crunchbase data, leading more than half at an average size of $112 million. It has already had three exits, including Hippo Insurance, which went public via a SPAC and in which Bond is listed as an owner of more than 5 percent of stock according to the S-1.
Acrew Capital, founded by Theresia Gouw, Lauren Kolodny, Mark Kraynak, Asad Khaliq and Vishal Lugani in 2019, all previously at Aspect Ventures, raised a $380 million second fund for early-stage investing and a $300 million second fund to invest at later stage. The firm has racked up seven unicorn portfolio companies amongst its 44 portfolio companies, three of which were also portfolio companies of Aspect Ventures, and the majority with a first investment at Series C and later.
Inspired Capital Partners was founded in 2019 by Alexa von Tobel, sole founder of LearnVest, and Penny Pritzker, the former U.S. Secretary of Commerce. The firm closed on a second fund of $281 million in September.
“We’ll focus on everything from early seed; that check can be $1 million to $3 million, all the way up to your series A, where we could write up to a $15 million check,” von Tobel said to Crunchbase News, speaking about the close of its new fund.
The company likes to lead or co-lead and will invest in 25 to 30 companies from the new fund.
Graduating to fund 3
Third funds are the next largest cohort, at 14 percent of the total raised by U.S.-based female-founded firms with funds above $25 million.
These include Los Angeles-based Fika Ventures, co-founded by Eva Ho and TX Zhuo, that raised a $160 million fund 3 and a $35 million opportunity fund.
Boston-based seed investor Pillar VC with founding partners Sarah Hodges, Jamie Goldstein and Russ Wilcox, raised a $169 million fund 3 and a $23 million select fund in July.
And San Francisco-based edtech investor Reach Capital, co-founded by Jennifer Carolan and Shauntel Garvey, raised a $165 million fund 3.
New funds
Inaugural funds were raised in 2021 by venture firm veterans. These include Washington, D.C.-based Construct Capital co-founded by Dayna Grayson previously at NEA and Rachel Holt, a past Uber executive. Construct Capital raised a $140 million inaugural fund to invest in foundational technologies that represent half of the U.S. GDP but have lacked investment–sectors like manufacturing and mobility–according to the firm.
San Francisco-based Renegade Partners was founded in 2020 by Renata Quintini, formerly at Lux Capital and Felicis Ventures, and Roseanne Wincek, a prior partner at IVP. Renegade closed on its first fund at $100 million.
And New York-based Avid Ventures, founded by former General Catalyst principal Addie Lerner, and joined by founding investor Tali Vogelstein, previously an investor at Bessemer Venture Partners. Avid Ventures has raised a $72 million first fund.
In summary
Female-founded firms have raised record amounts through the third quarter 2021. Consistent with overall trends in venture capital, firms are raising larger funds with a shorter time horizon between fund raises.
But in a year of record funds raised by venture capital, female-founded firms are not growing their proportion of dollars so far in 2021 compared to earlier years bar 2020.
However, the majority of these funds are focused on seed and early-stage funding, the stages that can have a disproportionate impact on founder success. If a startup is not able to raise an institutional seed round or overcome the Series A hurdle, it often ends up closing down. Female-founded firms tend to invest in female-founded companies by a higher proportion, according to our analysis. That means, if trends hold, we should see better fundraising odds for female founders as more women raise funds.
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Methodology
The data contained in this report comes directly from Crunchbase, and is based on fund reported data through Sept. 30, 2021. Female-founded firms for this report are defined as U.S. headquartered venture and micro-venture firms where at least one founder is a woman. We include firms with current founders and founders in emeritus in order to represent amounts and proportions over time.
Illustration: Dom Guzman
Note: A previous version of this article contained incorrect information about one of the founding teams. Avid Ventures was founded by former General Catalyst principal Addie Lerner who was joined by founding investor Tali Vogelstein.
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