Funding for Female Founders Is Going Backward

For fuck’s sake…fund women already

A recently published report shows that venture capital funding for female founders is going backward.

I wish I could say I’m surprised, but mostly I’m just pissed off. 

In 2021, female founders received only 2% of venture capital funding, the lowest percentage since 2016. That percentage for WOC? Even more abysmal. While there are some incredible Black women shaking up the space, prior to last year there were only 93 Black women who raised more than $1m in venture funding for their businesses. Ever. 

For comparison, male-founded companies in the US raked in a combined ~$272 billion dollars in VC funding in 2021 alone. Can anyone say gender bias?

While last year included some milestone IPOs for female-founded startups, it also left these businesses more vulnerable within a seemingly endless pandemic that disproportionately impacts women. While many entities and organizations claim that the pandemic shined a spotlight on the “need to invest in women” (duh), last year’s results show that few venture capitalists are stepping up to do so. It’s quite literally their loss. Funded female-led startups have been shown repeatedly to outperform their male counterparts in terms of return on investment.  

It’s time for us to stop waiting for them to realize that women are worth the investment, and focus on reinventing the way in which we flow capital to women-led businesses.  

Don’t get me wrong, there are some amazing funds out there that are working hard to shift the VC model to be more diverse and equitable, like my favorites January Ventures, Mother Superior, and Backstage Capital. However, with less than 6% of VC firms being female-led, these funds are simply not enough to turn the tide any time soon. 

Rather than wait for a patriarchal model of VC funding to shift slowly in our favor over the next few decades, we have to start focusing on other strategies to move more money into the bank accounts of female entrepreneurs.

Here are some ways we can start:

1. Make a conscious commitment to put more money directly in the hands of women by buying from female-founded companies. Check out marketplaces like Dough and We Are Women Owned for great directories of where to spend your dollars in a way that directly supports female founders.

2. Boost investments in women founders by lobbying our government and financial institutions to expand small business lending programs, grants, and other funding mechanisms for female founders.

3. Move our money away from banking systems that aren’t actively offering programs that support female-only founders and shift your dollars to an institution that is built by women and for women, like Ellevest. 

4. Minimize the burden and requirements required for small business lending so female founders can get start-up funding from their local bank without three years of tax returns. This includes pushing for tighter regulations on capital institutions that have predatory lending practices in the form of high-interest lines of credit and loans that target women and minority-owned businesses.

5. Create and contribute to more cooperative and accelerator models, like iFund Women and Graham & Walker, and invest in each other through education, development, crowdfunding, and other group financing mechanisms.

We can’t keep waiting for VCs to change. We need to start looking for other strategies to ensure that women-founded startups receive the funding they need to thrive. With more women than ever before starting businesses of their own, and women in the majority spending seat, don’t wait for the systems to decide women are worth the investment. Let’s disrupt the financial future for female-founded companies everywhere.