By year’s end, it was clear that the pandemic hadn’t slowed down the startup fundraising landscape. Despite early lockdown warnings of a “Black Swan” event for entrepreneurs, 2020 was a record-breaking year for venture capital for total dollars deployed and raised in the U.S. But the good times weren’t equitably shared. New data from All Raise shows that women-founded startups took a major step backward last year, even as their male peers raised more funding than ever before.
Women entrepreneurs in the U.S. ultimately raised about $22 billion in 2020, representing 14.4% of a record $156 billion, according to PitchBook, that flowed into the tech industry last year, industry organization All Raise found. That’s down from 16.9% of total funding for U.S. startups in 2019, when women-founded startups raised a comparable amount of a smaller $130 billion of overall deployed capital.
For the purposes of their study, All Raise counted any startup with a woman co-founder as women-founded, meaning that nearly 86% of total funding last year went to all-male founding teams. The numbers get starker from there. Startups led by all-women founding teams accounted for only 2.3% of funding raised, at $3.5 billion, compared to 2.5% in 2019, or $3.25 billion.
The data, which includes deals closed in 2020 that hadn’t been announced by year’s end, confirms previous reports from that time that anticipated the results. “Obviously 2020 was a tough year,” All Raise CEO Pam Kostka tells Forbes. “After years of incremental progress forward, there was a backslide here and serious headwinds.”
The past year also saw a slowed pace of improvement for women in check-writing roles. All Raise tracked 27 new women joining VC firms in jobs with investment-decision-making responsibilities in 2020; that compares to 54 women who joined firms in such jobs in 2019. Of the new crop, just one woman was Black; none identified as Latinx.
At ReThink Impact, a firm investing in women-founded startups, founder and managing partner Jenny Abramson co-led All Raise’s data crunch. Abramson said 2020’s results reminded her of the VC industry when her mother, Patty Abramson, founded Women’s Growth Capital Fund in 1997. “My own mom ran the first ever women-run VC, which is why I got started [in the industry], and the numbers were worse [in 2020] than when she was doing it 20 years ago, which is astounding,” Abramson says. “We were moving in the right direction in all of the areas, and 2020 was really the backslide.”
Abramson warns against any argument that the lower relative numbers come from a “pipeline problem,” or lack of steady inflow of venture-backable women-led businesses for investors to choose from. Her firm alone looked at nearly 1,000 businesses founded by women just in 2020, she says. BBG Ventures, which also invests in women-led startups, recently said similar when managing director Susan Lyne told Forbes that BBG had seen approximately 8,000 women-founded startups over the firm’s eight-year history. “This was not a case that women aren’t out there running businesses or asking for money, the problem is that they don’t have access to the same networking,” Abramson says. “That got worse during the pandemic.”
At All Raise, Kostka voices some words of optimism. On the addition of more partner-level hires, especially women of color, she argues that 2021 will be more of a put-up-or-shut-up year for firms that pledged to invest more in diverse teams last summer, given the months-long processes for VC firms to make partner hires. And she points to other signs of hope from early 2021, such as Bumble, the dating company led by Whitney Wolfe Herd, going public at an $8.2 billion valuation, and woman-co-founded Evidation Health raising a $153 million Series C round in March.
All Raise plans to spend the rest of 2021 placing added focus on supporting and promoting early-stage, women-founded companies with the hope they can raise follow-on capital to buck 2020’s trend.
“Measuring the status quo is super important to us. It is always key to us to hold ourselves and the industry accountable,” Kostka says. “Obviously 2020 was a tough year after years of incremental progress. It really is just a stark reminder that systemic bias is still driving a lot of these conversations.”
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