How should female founders reflect on 2019? From a statistical perspective, the year could certainly be seen as step forward: the share of VC dollars that flowed into startups founded by a woman or a group of women crept up over 2019, hitting $3.54 billion, or 2.7% of total investment.
But a more holistic look at the venture capital landscape puts that stat in a slightly different perspective. Consider WeWork, arguably the most notorious startup flameout of the year, if not the decade. In 2019, investment juggernaut SoftBank poured at least $5 billion into the imploding co-working company. That’s about $1.5 billion more than the total VC investment in all female-founded companies combined during the same period, according to data provided to Fortune by PitchBook, a company that tracks data from the venture capital and private equity industries.
“It’s the most visible public argument that could be made for why gender diversity in founding teams, in cap tables, at the board level, and in management at a company is compelling,” Pam Kostka, CEO of the organization All Raise, which advocates for women in startups and venture capital, says of the WeWork comparison. 2019 isn’t the first time the money funneled into female-founded companies has paled in comparison to other investor darlings: in 2018, female founders landed $10 billion less than Juul after a corporate mega-investment in the e-cigarette company.
The $3.54 billion that went to companies founded only by women accounts for a slightly larger share than such startups took in in 2018: 2.7% vs 2.2%. That’s still below 2014’s high, by percentage, of 3.1%. Another $14.76 billion, or 11.5% of the total pot, went to mixed-gender founding teams in 2019.
Women didn’t fare much better in terms of the total number of VC deals done. Investors shelled out for 648 total deals backing female-only founding teams—compared to 7,336 transactions for all-male founding teams. All-female teams got 6.8% of total VC deals by that metric.
The difference between percentages by dollar amount and by number of deals—2.7% compared to 6.8%—shows another gap, this time in the size and stage of the deals venture capitalists are backing for women. The average deal for a female-only founding team was $6.6 million; the average for an all-male founding team was $17.1 million. The median deal size for a female-only founding team was $1.9 million compared to an all-male team’s $3.5 million.
Most of the money going to female-founders—$1.58 billion—went to companies raising money when they’re considered early stage, at Series A or B as defined by PitchBook; 236 such deals were closed by all-female-founded companies in 2019. That funding drops off slightly for later-stage funding in Series C rounds and beyond: $1.44 billion divvied up among 95 deals last year.
Male founders, by comparison, see a dramatic increase in total funding moving from early to late stages, where rounds tend to be larger: $32.19 billion in early stages and $69.34 billion in late stages.
That discrepancy is not something that can be erased quickly, says Kostka; until more female-founded companies are funded adequately in the early stages and grow successful to the point where they can drum up later-stage rounds, the gap will remain.
While PitchBook does track the size of company exits by gender, the sample size is small. Some notable exits for female-founded companies in the past year include the April initial public offering of CEO Jennifer Tejada’s PagerDuty, which saw the stock skyrocket 60% on its first trading day to a $1.8 billion valuation, and the July IPO of founder and CEO Julie Wainwright’s TheRealReal.
Parsing individual rounds also sheds some light on the year in the funding female founders. The largest deal for an all-female-founded company in 2019—$157 million for Rachel Romer Carlson and Brittany Stich’s Guild Education—was still more than $440 million less than the 10th-largest deal for all-male founding teams last year.
It’s not all bad news: 2019 was a remarkable year for female-founded companies becoming unicorns—startups valued at more than $1 billion. The $125 million round in March for Jen Hyman’s Rent the Runway that brought the company to unicorn status was the third biggest deal of the year for a company founded only by women. Glossier’s $100 million Series D round in the same month did the same for the beauty brand founded by CEO Emily Weiss.
Four female-founded companies, including Glossier, raised exactly $100 million in 2019, creating a four-way tie for the fourth-biggest deal of the year for female founders. One of those other $100 million cash infusions went to Away, the luggage startup founded by Jen Rubio and Steph Korey that has faced turmoil in recent months over Korey’s leadership style as chief executive.
The other deals among the top 10 belong mostly to biotech companies like SpringWorks Therapeutics, founded by Lara Sullivan (although she no longer serves on the company’s management team); Talaris Therapeutics, founded by Suzanne Ildstad; and Insitro, founded by Daphne Koller.
The venture firms that invested in the most female-founded companies in 2019 include Alumni Ventures Group, Precursor Ventures, Founders Fund, and Female Founders Fund. Over the past decade, New Enterprise Associates has invested in more female-founded companies, with 53 total deals, than other firms; the firm in second place by that measure, Golden Seeds, backed 46.
From the funder perspective, 2019 saw a modicum of progress. According to All Raise, 54 women last year were named VC partners or general partners at firms with more than $25 million in assets under management (excluding life science and corporate VC firms). That’s an all-time record, beating 38 women named partner in 2018. Most of those women are white and Asian; only two identify as black or Latinx.
However, those numbers still aren’t anywhere close to parity in new appointments: more than 70 men were named partner last year. And the venture world as a whole remains overwhelmingly male, with 65% of VC firms still lacking a single female partner.
Despite the slow rate of progress for women in VC and the funding going to female-founded companies, tracking these incremental gains is important, says Kostka. While raising venture capital certainly does not ensure success, it does enable opportunity.
“Women are not raising as much as men, so they have fewer opportunities to fail. Failure is part of the story in the early lifecycle of an organization,” says Kotska, who worked at several early-stage startups throughout two decades in Silicon Valley before taking over All Raise. “We need to make sure women are getting enough capital to go through that learning process and achieve success on the other side.”
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