The State of Funding for Women-Founded Companies in 2024

Funding for women-founded companies has taken a noticeable dip in the first half of 2024 compared to the same period in 2023. According to PitchBook data, these companies secured $15.5 billion out of a total of $93 billion in venture capital, accounting for 17% of the total funding. This is a significant decline from the $24.8 billion out of $87.7 billion, or 28%, raised in the first half of 2023. This trend raises important questions about the evolving landscape of venture capital and the challenges faced by female entrepreneurs.

All-Women Founding Teams: A Persistent Challenge

The statistics reveal a stark reality for all-women founding teams, which have raised only 2.2% of the total venture capital allocated this year. Since 2014, these teams have never exceeded 3% in venture capital funding, and for the past four years, they have consistently hovered around the 2% mark, even as overall capital allocated to U.S. startups reached record highs. This persistent underfunding highlights systemic issues within the venture capital ecosystem that continue to disadvantage female founders.

Slower Activity in 2024

The first half of 2024 has proven particularly challenging for companies with all-women founding teams. PitchBook’s lead venture analyst, Kyle Stanford, noted that the activity for these teams is significantly slower than last year. He pointed out that as investors become more cautious and focus on supporting their existing portfolios, less capital is available for new ventures. The current political climate also plays a role, as highlighted by the ruling against the Fearless Fund in June, which has raised concerns about the support for women and diverse founders.

Dwindling Deal Counts

The decline in funding is further illustrated by the decrease in deal counts. In the first half of 2024, venture capitalists backed only 372 startups with female founders, a sharp drop from 536 in the same period in 2023. This trend suggests that female-founded companies are struggling to attract the necessary investment to advance beyond the seed and early stages of development. The increased benchmarks for new funding rounds have made it even more challenging for these startups to secure the capital they need to grow.

Breakout Success Stories

Despite the overall decline, there have been notable success stories among female founders. For instance, Julie Bornstein’s new startup, DayDream, raised an impressive $50 million seed round in June to develop an AI-powered e-commerce search engine. Additionally, venture growth-stage investment in female founders is on track for an annual record high, with companies like Romi Gubes’ Sensi.AI securing a $31 million Series B to monitor seniors. These successes demonstrate that while challenges persist, there are still opportunities for female entrepreneurs to thrive.

Year-Over-Year Funding Increases

Interestingly, there has been a slight year-over-year increase in funding for companies with all-female founding teams. In Q2 2024, these teams raised $1.1 billion, compared to $900 million in Q2 2023. This marks the highest quarterly funding for all-women teams since they raised $1.5 billion in Q2 2022. However, the broader reality remains that these startups are likely to raise only about 2% of total venture capital funding this year.

The Mixed-Gender Advantage

One factor contributing to the disparity in funding is the perception that mixed-gender teams offer a more balanced perspective and a broader skill set. Kate Bodrova, founder of the edtech company Amazy, noted that mixed-gender teams often secure more funding. She emphasized the importance of focusing on growth and building a strong team resume, regardless of gender. “Funding will follow,” she stated, encouraging founders to concentrate on delivering value through performance.

Navigating Bias in Venture Capital

Bias within the venture capital community is an undeniable factor affecting funding for female founders. While some may suggest that women should adapt by seeking male co-founders to improve their chances, Bodrova advocates for a different approach. She encourages all founders to remain focused on their business objectives and to build a compelling case for their company’s potential. This mindset can help mitigate the impact of bias and create a more equitable funding landscape.

The current state of funding for women-founded companies in 2024 reflects both challenges and opportunities. While the decline in overall funding and deal counts is concerning, the emergence of breakout successes and slight year-over-year increases in funding for all-women teams offer a glimmer of hope. As the venture capital landscape continues to evolve, the resilience and determination of female entrepreneurs will be crucial in shaping a more inclusive future.