COVID-19 Diversity Venture

Global VC Funding To Female Founders Dropped Dramatically This Year

Illustration of female founder working with COVID graphic

Global venture funding to female-founded companies fell significantly in 2020, according to Crunchbase data. Although investors and entrepreneurs say it’s not clear if the decline is entirely due to COVID-19, the pandemic has disproportionately impacted women in the workforce.

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“I think COVID has a complex impact on female founders,” Pocket Sun, founder of New York-based SoGal Ventures, told Crunchbase News. “I saw women being disproportionately burdened by unpaid labor during COVID, and women starting or pivoting their businesses due to the destructive nature of COVID, but I also saw women growing their businesses like crazy because their companies serve real, important needs and they are more agile and capital efficient to adapt.”

Crunchbase data shows more than 800 female-founded startups globally have received a total of $4.9 billion in venture funding in 2020, through mid-December, representing a 27 percent decrease over the same period last year. Although that percentage decline will likely shrink relative to 2019, as fundings from 2020 are belatedly recorded after the end of the year, this year is still expected to show a substantial drop in total dollars to female startup founders.

Sun’s firm invested at the seed stage in home health test-maker Everlywell, one of the few companies led by a female founder CEO to join the unicorn board this year.

All told, SoGal Ventures portfolio companies have raised just under $450 million this year.

How Women Invest, a new fund focused on funding women, has received 150 investment applications from female-founded companies since August.

“We have seen that female founders are focusing on the same issues that have been impacted or exacerbated during the pandemic: inequitable systems in work distribution and health care/life sciences,” said Erika Cramer, co-founder and general partner at How Women Invest.

“COVID-19 has had a significant impact on family caretakers of children and elderly,” acknowledged co-founder and general partner at How Women Invest Julie Castro Abrams, citing a September 2020 McKinsey report on women in the workplace that found “as much as 30% of working mothers are considering leaving the workforce. This could throw equality for women back 10-20 years,”

For Sun of SoGal Ventures, the pandemic has also presented a chance to invest in startups that are tackling some of the very problems faced by the women it invests in.

“I think our success is because we invest in a women-led future of living, working and staying healthy, and COVID accelerated that future,” Sun said. “Our portfolio is all about making women’s lives easier and better, and that need is never going away.”

Crunchbase data show that not only did total funding to female-led startups fall this year, but the proportion of dollars to female-only founders also declined, to 2.3 percent, compared to 2.8 percent in 2019.

“What we know is that women raised less capital,” said Susan Lyne, co-founder of BBG Ventures, a New York-based fund that invests in consumer tech with a female founder. “What we don’t know is whether fewer women were successful raising rounds, or fewer went to market. If it turns out to be the latter, a few things may have contributed: In March, when COVID first hit, every VC told their portfolio companies to assume they would not be able to raise till 2021, and to put plans together to stretch their capital accordingly. Many companies made deep cuts and some changed their strategy from growth to ‘get profitable.’ It may well be that women made deeper cuts initially, and as a result did not meet KPIs they needed for their next raise. But this is speculation until someone looks at the data.”

It’s worth keeping in mind that funding amounts to female-only founded companies tend to fluctuate year over year and are heavily influenced by outsized funding rounds. A single company that raises a very large funding round, for example, has a huge impact, as happened in both 2016 and 2018 with billion-dollar funding rounds led by female-founded Ant Group.

In the case of BBG Ventures, which Lyne co-founded in 2014 with Nisha Dua, deal flow was up 24 percent year over year for the 12 months ending August 2020, and 17 percent year over year from March to August 2020. According to the firm, by early May, founders at the seed stage were back raising funding.

Portfolio companies in the fund have raised $438 million this year to date, per Crunchbase data.

Fewer women-led startups become unicorns

Everlywell, an in-home health care testing company, is one of the few companies led by a female founder/CEO to join the Crunchbase Unicorn Board this year. So far in 2020, just 10 of the 120 new unicorns joining the board have a female founder, according to a Crunchbase News analysis. That’s compared to 21 who had done so by this time last year, when hordes of female-founded companies including Glossier, Rent the Runway, The RealReal, Away, Guild Education and Coursera joined the list.

Julia Taylor Cheek founded Austin-based Everlywell in 2015. Its in-home COVID-19 test was approved by the FDA in May. “We recently hit a milestone: We’ve helped a million people take control of their health, less than four full years into operation. Our sales are expected to quadruple this year,” said Cheek.

This milestone is due in part to an increase in demand for home-based health as a result of the pandemic, she acknowledged. “However, even before the pandemic, we knew that Americans wanted and needed a more accessible, convenient way to get basic lab tests done, especially for the millions of Americans who don’t have adequate (or any) health insurance.”

Everlywell announced two fundings this calendar year, and has raised a total of $250 million since April 2019.

Funding to startups with a male co-founder holds steadier

Funding to companies with both a male and female co-founder has tracked more consistently above $20 billion each year since 2017, ranging between 9 percent and 10 percent of overall dollars raised, with 2017 an outlier at 13 percent.

Funding counts seen here trending down will increase relative to prior years, as we generally find a substantial data lag for seed fundings, which make up the bulk of rounds.

Round count proportions are flat

From 2017 onward, 6 percent of rounds were in female-only founded companies and 13 percent in female/male co-founded teams.

Funding by stage

To measure how funding to female founders has changed in the last five years, we looked at funding by stage to see if there are underlying trends dwarfed by larger amounts in late-stage financings.

Seed represents a higher proportion than early or late stage for funding counts; also broadly for amounts. Funding is sequential, so a higher proportion of seed should play forward to make a dent in future years in earlier and later-stage funding.

Funding since 2015

Although funding to female-founded startups fell this year, there’s been progress in the past five years that’s not always easy to see when year-over-year progress can seem slow or stalled. The absolute number of startups with sole female founders that have raised funding since 2015 totals more than 4,200, according to Crunchbase data. A further 7,700 companies are co-founded by both female and male leads. These numbers represent a 72 percent increase for female-only founded companies and a more than 56 percent increase for female/male co-founded startups from 2011 to 2015.

Amounts raised by sole female founders also reflect these trends with a fourfold increase in the last five years compared with the previous five-year period.

All Raise, an organization that advocates for female investors and founders, has set a target of growing seed and early-stage funding amounts from 11 percent to 23 percent by 2030 for companies with a female founder in the U.S.

“In 2019 we saw a staggeringly small amount of U.S. VC funding go to female-founded companies—12%—and that was following two record-setting years of over $130B deployed by U.S. VC,” All Raise CEO Pam Kostka told Crunchbase News via email. “So it’s no surprise that with a looming economic recession, women are, again, being disproportionately impacted, with record low funding going to female founders.”

The recent numbers “show that the flywheel of male-dominated wealth creation is hardening,” Kosta said. “So what’s the solution? Tech and VC are industries built on two things: relationships and insider knowledge. Which is why at All Raise, we operate an access, guidance, and support model focused on creating a more inclusive network for female founders—opening doors to new funding, talent, customers, and partnerships; and providing expert business advice and mentorship to help founders fundraise smarter, scale faster, and build community.”


Our analysis is based on announced funding to companies with founders associated. 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.

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 the company launches a product, or otherwise gets much outside media coverage surfacing information about the company’s funding history.  As data is added to Crunchbase over time, some of the numbers in this report may shift slightly.

Illustration: Dom Guzman


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