Venture capital funding in startups with at least one female founder more than doubled last year to $46 billion globally, up from $21.9 billion in 2017, according to a new report from research firm PitchBook and All Raise, a nonprofit that advocates for women founders and funders.
The spike in 2018 funding means that the money put into female-founded startups represented 18% of the total venture capital invested last year, up from the typical 12% to 14% range seen since 2013. And in select sectors such as education and retail, up to 30% of all venture capital funding is going to firms founded by women, according to PitchBook and All Raise.
Though the progress often feels slow, the past decade has ushered in undeniable improvements for women on the startup scene. The total number of VC-backed tech startups with a female founder has grown from 410 companies in 2009 to more than 2,700 last year. And that $46 billion invested in women-led companies 2018? “For perspective, only $3 billion went to female-founded startups in 2010, translating into a more than 15-fold increase over the past decade,” the Pitchbook and All Raise report notes.
While the number of deals involving startups with at least one female founder has been pretty steady in recent years, deal sizes and valuations have gotten larger, according to PitchBook. Indeed, female-run startups including Away, Glossier, and Rent the Runway each reached $1 billion valuations in 2019.
Studies show that diversity at firms leads to better financial outcomes, and that women investors are more likely to invest in companies with female founders. A handful of VC firms run by women, such as the Female Founders Fund, are exclusively investing in female-founded startups and are helping break up tech’s boys’ club. Other major VC firms have recently named their first female general partners, including Union Square Ventures, which hired Rebecca Kaden from early-stage VC firm Maveron in 2017, and First Round Capital, which hired Birchbox co-founder Hayley Barna the same year.
There VC world still offers several indicators of the progress yet to be made, however. For instance, as the VC market has expanded globally, and the number of total startups funded by VCs has increased, startups with at least one female founder have continued to make up just 20% of all VC-backed companies for the past several years, according to PitchBook and All Raise. And in fields like fintech, VC investments in startups with at least one female founder accounted for just 15% of the total invested in 2018.
Notably, female entrepreneurs are looking outside of Silicon Valley to raise funds and start businesses—and they’re often doing better in these markets. According to Pitchbook and All Raise, at the end of 2018, startups with at least one female founder secured just 19% of total investment in the San Francisco Bay Area, compared to 28% in Los Angeles, and 27% in New York.