U.S. startups overall raised a record $143 billion in 2020, up 12 percent over the previous year, but funding to venture-backed companies founded solely by female entrepreneurs dropped 22 percent during the pandemic year, Crunchbase data shows.
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But American startups founded solely by female founders raised only $3.2 billion in 2020, down a billion dollars from $4.2 billion in 2019 — the peak year for funding to sole female founders — per Crunchbase data.
That drop in funding to sole female founders was particularly pronounced in the later-stage rounds, with seed and earlier stage funding amounts down just slightly year over year.
While these amounts will likely shift over time as funding rounds that occured last year are retroactively added to Crunchbase, the data highlights a dichotomy between funding trends for startups founded by male and female entrepreneurs. While there was a decrease in funding to sole female founders, funding to female/male co-founded companies increased marginally year over year in 2020.
The pandemic’s effect
It’s not entirely clear how much of the drop in funding to female startup founders in the U.S. can be pinned on the COVID-19 pandemic. Nor are the reasons why the outbreak would have a disproportionate effect on female startup founders, although the pandemic did impact women in the workforce more severely than men, with women still largely filling caregiver roles.
One bright spot in the data: The fact that late-stage funding is the most impacted suggests that the pipeline for seed and early funding did not suffer markedly in 2020, a good sign for diverse founders.
Crunchbase News spoke with U.S.-based venture firms during the pandemic, which reported that in 2020 they did not see a downturn in the numbers of female founders pitching for funding.
Still, “many of the hot early-stage companies over the last year were led by repeat founders which historically have been men,” according to Alda Leu Dennis a partner at Initialized Capital, a firm where 50 percent of the senior partners are women. Highlighting that trend, Leu Dennis noted in a recent email to Crunchbase News that Initialized’s existing portfolio companies “were written up 59 times in the last nine months.”
She also noted that in the U.S. venture markets “there are fewer female investors at the growth stage compared to early stage investors, and you can see that effect in the reduced funding dollars for female entrepreneurs.”
Venture dollars invested in sole female founders in 2020 represented 2.4 percent of overall venture funding, down 1 percentage point compared with 3.4 percent in 2019 and again mirroring percentages earlier in the decade.
The percentage of deals that went to female-only founded startups was 7.5 percent in 2020, and has been trending above 7 percent since 2018.
For this analysis, we excluded companies with no founders associated. We also excluded private equity funding.
Snapshot for 2020 by stage
These overall funding trends can mask what is happening at each funding stage for sole female founders and female/male co-founded companies.
Here we look at the representation by stage for companies with a female founder.
Sole female-founded companies by stage in 2020
- The percentage of U.S. venture dollars that went to sole female founders in 2020 dropped dramatically by stage. At the seed stage, 7 percent of VC dollars went to startups with only female founders. At the early stage, that figure was 4 percent, and at the late stage, a mere 1 percent.
- The percentage of venture deals to sole female founders was higher, with 10 percent of VC deals going to startups at the seed stage, 5 percent at early stage, and 2 percent of deals for late-stage funding.
- At each stage in 2020, the mean and median amount raised for female-only founded companies was less than those figures for their male-only counterparts.
Female/male co-founded companies raise more
- Venture-backed startups with both a male and female co-founder raised more dollars than female-only founded companies last year, receiving 16 percent of U.S. seed funding in 2020, 15 percent of early-stage funding, and 8 percent of late-stage funding dollars.
Funding percentages also trended down through the stages in 2020 more dramatically for female -only founded startups versus those with male and female co-founders. As larger funding rounds and late-stage funding has grown as a portion of overall dollars in 2020, rounds to female-only founders have not grown at the same rates.
If you add these percentages together, 23 percent of seed dollars, 19 percent of early-stage funding, and 9 percent of late-stage funding went to companies with at least one female founder in 2020.
Trends over the decade
It is also worth understanding these funding proportions by stage year over year and over the last decade to assess if the funding environment for female-only founders has improved in more recent years. At every stage over the decade, absolute counts and amounts have increased for 2020 when compared to 2011. However, the proportions by year have not consistently increased.
- The seed proportion of funding to sole female founders almost doubled from 5 percent of deals in 2011 to 10 percent in 2020 and grew from 4.9 percent of dollars to 6.8 percent.
- But Crunchbase data doesn’t show the same rate of growth for deal counts at early-stage funding to sole female founders over the decade.
- For late-stage funding, the proportion of dollars and deal counts trended down in 2020 when compared with 2011. Absolute amounts are up from half a billion dollars in 2011 to $1 billion in 2020 for sole female founders. Absolute dollars for male-only founders increased more than fourfold over the same time frame.
A 5-year snapshot
Over the past five years, more than 2,000 companies with sole female founders have been funded in the U.S., per Crunchbase data. Of these companies, 75 percent are at the seed stage, 20 percent are at early stage, and a much smaller proportion, 5 percent, are at late stage.
- There are more than 4,000 female/male co-founded companies that received funding in the past five years, per Crunchbase data. Of those, a higher proportion — 28 percent — are early stage and 8 percent are late stage.
- Within the more than 23,000 male-only founded companies that received funding in the past five years, early-stage companies represent 30 percent and late-stage 11 percent.
In 2020, 10 companies with at least one female founder joined the Crunchbase Private Unicorn Board, a list of private companies valued at $1 billion or above via a funding round.
So far in 2021, six new female-founded companies have joined the board, out of 58 new U.S.-based unicorns.
These new female-founded unicorns include: crypto loan company BlockFi; mental wellbeing platform Modern Health; cloud-based HR company Papaya Global; fashion brand Savage X Fenty; health insurance service Sidecar Health; and data analytics platform Starburst Data.
Of the 486 U.S.-based current private and exited unicorns, 71 have at least one female founder.
Late-stage funding to sole female-founded startups was 1.2 percent in 2020, down significantly from 2.5 percent in 2019. The number of late-stage VC funding deals to female-founded startups also trended down year over year.
Along with the wide disparity in funding to male-only versus female-only founders, female-only founders also tend to raise less than their male counterparts.
Despite these significant challenges, the drop in funding to female-founded U.S. startups was less precipitous at the early and seed stages last year, Crunchbase data shows. The fact that seed and early-stage funding to sole female founders held up in 2020 despite the pandemic is encouraging, suggesting that the pipeline of younger startups founded by women is resilient and could lead to more funded late-stage startups founded by women in the future.
Our analysis is based on announced funding to companies with founders associated, which amounts to $136 billion of a total of $143 billion invested in 2020. We include private company fundings from seed through late-stage venture. Private equity rounds are excluded.
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. (Note: In addition to “male” and “female,” Crunchbase has more than two dozen other gender tags.) Based on an analysis of current data for this report, more than 85 percent of dollars raised in the last 10 years are associated with companies that have founders listed.
Crunchbase, like all databases of private-market transactions, has a documented pattern of reporting delays. It can sometimes take between weeks and months for some rounds to be announced publicly and subsequently get added to Crunchbase. This is especially the case for the most recent year, and for seed and early-stage deals, which are often raised by companies before it launches a product, or otherwise gets much outside media coverage surfacing information about its funding history. As data is added to Crunchbase over time, some of the numbers in this report may shift slightly.
Illustration: Li-Anne Dias
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