Though the ongoing pandemic has been challenging for women-led businesses, a new report from Pitchbook shows how female founders are navigating the worldwide economic setback.
The 2021 All In: Women in the VC Ecosystem report, co-sponsored by Beyond the Billion (BTB) and J.P. Morgan Chase, aims to "quantify trends in the venture capital (VC) ecosystem involving female founders and investors." As of Sep. 30, 2021, the median valuation for early-stage, female-founded start-ups increased from $30 million to $45.5 million in the past year. For late-stage start-ups, median valuations also increased from $70 million to $120 million, a 69.4% increase from last year.
Between March and June 2020, when much of the U.S. was under government mandated quarantines and shut downs, companies founded by women were disproportionately affected in comparison to male-led companies. Female-founded businesses observed a 28.1% decrease in investments, while male-founded companies only saw a 5.4% decline during that same three-month period.
That year, offers and opportunities for women-led companies was extremely irregular; women would not begin to see a steady increase until December 2020. However, men continued to see "incremental increase" in deal flow throughout the year, in spite of challenges due to Covid. Though female-founded businesses ended the year strong, there was a clear advantage for businesses that were male-led.
Ann Cairns, global vice chair at Mastercard, a sponsor of BTB, shared how her company has been dedicated to supporting women and driving for a more "inclusive future."
"From new products and services, to adapting to an increasingly digital status quo, we've witnessed female led businesses show even more resilience in the face of the global economic downturn." she said to BTB. "At Mastercard, we're committed to supporting 25 million women entrepreneurs by 2025 as part of our broader financial inclusion goal. We help women entrepreneurs get paid, get capital, and get digital, because they drive global growth and innovation."
Other companies in the S&P 500 have also committed to fostering a culture of inclusivity; and their efforts have been making progress, as 30% of all S&P 500 board directors are now female.
Additionally, the All In report highlights the increase in angel investors supporting female-founded companies and how many women are "on the other side of the table" from female founders, or had "check writing" authority.
In 2019, according to data from Pitchbook, only 12% of check writers in the U.S. were women. Now, 15.4% of venture capital executives able to make investments are female. This increase may seem miniscule, but BTB explains the ripping effect that can occur from this growth, as "female founders tend to seek out female investors and that the chances of a female-founded company successfully securing financing can rise with a female investor in the room."
"I look to invest in companies that are either woman/minority founded, have a strong social/environmental mission, and companies where they strive to help lower the barrier into sports, such as golf," said professional golfer and angel investor, Michelle Wie West, in the report.
Women VC executives have been on the rise across the country in areas like Silicon Valley, where 17.1% of general partners are women, New York City (16.8%), Boston (14.5%), and LA (12.9%). New York saw the biggest increase amongst the four, as women only made up 11.8% of all NYC-based VC executives this time last year. Areas like tech, health care, and fintech, have all seen increases in VC deal activity for female-founded companies across the nation.
For many female founders, the goal is to inspire and uplift the next generation of innovators and entrepreneurs. Katie Rae, CEO and managing partner at The Engine, an institute for tech companies, founded the Equity Summit, a virtual conference that drives industry change and "brings together people to get more funding into the hands of women."
"I launched Equity Summit with Trae Vassallo and Mar Hershenson to give underrepresented investors exposure and access to professional networks." she said in the report. "There are so many problems that need to be solved in the world today, and so many brilliant women to solve them."
Though there is still work to be done, as 84.6% of GPs are men and male-led businesses still have an advantage, there is undeniable growth in female-founded companies nationwide, and they're expected to gain even more momentum next year.