Female-owned businesses are having a breakthrough: A historic 21 women-led companies, including Guild Education, Rent The Runway and Tala, were unicorns in 2019, earning valuations of $1 billion or more—the highest-ever in a one-year period, and businesses founded by women are delivering higher revenue than male-founded businesses.
Yet female-founded companies continue to receive less funding at all rounds, according to new data by Crunchbase. The report found that while male-only founders raised $195 billion in 2019, female-only founded companies raised just $6 billion. Female founders with a male cofounder were at a much higher advantage: They raised $20.9 billion in 2019.
The silver lining? Female founders are receiving more funding across almost every funding stage, gaining the most progress at the seed level, the first funding step in a startup’s journey. The average seed for female-only founders was $1.2 million in 2019, up from $350,000 in 2010. This is compared to $1.35 million that male founders raised in seed rounds last year.
“This is encouraging because that means as we play out into future years, hopefully more of those companies will be raising more at the latest stages,” says Gené Teare, the report’s data evangelist.
The amount of female-founded companies has also doubled in the past five years, in large part due to women who go on to start more than one company. “I find in this industry, we’re seeing lots of serial founders,” says Teare, “if you’ve done something going on and doing it again, it’s sort of has a cascading effect.”
But there’s an ongoing factor perpetually threatening the funding gap: Men continue to invest at a much higher rate than women. “Female founders have been asking ‘why is it always men on the other side of the table?’” Teare adds.
Female-focused venture capitalist firms and advocacy platforms are making an effort to increase representation in the investing space, including Rebecca Minkoff’s Female Founder Collective. It’s partnering with the Swiss investment banking company UBS to launch a Project Entrepreneur initiative: a series of summits centered on access to capital for early and growth stage female founders and a curriculum aimed at educating early-stage entrepreneurs about seeking the right investors. Founders are eligible for the program if they’re at least 50% female-owned, have a viable prototype and have not raised a Series A or more than $3 million.
“I think you still have, to some degree, the boys club,” Minkoff tells Forbes of the current investment landscape.
But that’s not the only reason she believes women have a hard time accessing funding. “We’re newer to this, so there seems to be this mentality that the only route is venture capital. Not everyone should seek venture capital funding,” she adds. “There’s private equity, there’s crowdfunding specifically for women like IFundWomen, there’s bank loans. I think that we’re making strides but we need to also say this is the breadth of opportunities available to you don’t just have to go down this one route.”
While Crunchbase’s report doesn’t reflect numbers by race, the role of intersectionality with respect to access to funding can’t be ignored. Women of color have a much harder time—less than 1% goes to these businesses. Firms including Arlan Hamilton’s Backstage Capital, Arian Simone and Keshia Knight Pulliam’s Fearless Fund and Serena Williams’ Serena Ventures have stepped in to help.
“This is a time-sensitive matter,” Backstage Capital’s Arlan Hamilton told Forbes last year, and her words continue to remain timely. “Every day that we’re not doing this we’re missing out on discovering someone brilliant who’s not been allowed at the table.”