2021 is a better year for female founders?
Although 2020 was a disappointing year for FemTech investment, accounting for 1.8% of all digital health investment, it seems 2021 is a much brighter year.
Pitchbook’s report, All In: Female Founders in the US VC Ecosystem, paints a slow but positive picture for female founders.
A couple stats worth noting:
1) In 2021, 84.6% of VC partners were male, compared to above 90% two years ago. A long way left to go, but positive hiring changes are being seen in Silicon Valley, NY & Boston that will inevitably have an impact on female founders, as VCs with a women GP are more likely to invest in companies led by female founders.
2) The number of active female angel investors in the US has gone up to 1,000 in 2021 from 125 in 2011. Deal value and deal count will reach a record high (close to 1,000 deals @ $10 Billion in 2021) with almost 30% of investments going to female-founded companies.
3) Bad News: Historically there has been no real difference in the valuation of early stage female and male-led companies (there has always been a gap for late-stage valuations). The gap for early-stage companies emerged during the pandemic when the median valuation for female-led companies increased by 4%, compared to 15.4% for early-stage companies overall. Unfortunately, the gap for late-stage valuations grew as well, as female-led companies increased in valuation by 7.2% vs. 12.7% for the overall market. This does not bode very well for the future, as future valuations are influenced by a startup’s last valuation.
4) In 2020, even though overall venture investment grew, investment in female-founded companies fell by 3.0% and deal count fell by 2.2%. Things have turned around in 2021, where there is a larger growth in investment in female-founded companies than the overall market. 2021 growth in investment in female-founded companies can be seen in many industries, including healthcare.
5) Although frequently reported that companies with women in leadership positions have better business performance, 2021 exit stats are a good example. Female-founded companies have exited at 143.6% higher than 2020’s level, compared to the overall market at 101.5%.
Let’s hope for continued (albeit slow) progress in 2022!