February 26, 2021 | less than a minute read

Women-led startups are disproportionately successful, and good for the economy; so why aren’t they being funded?

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Narges M. Kakalia

Chief Diversity, Equity and Inclusion Officer

Get in touch

Narges M. Kakalia

Chief Diversity, Equity and Inclusion Officer

Women-led startups deliver higher returns than their counterparts. Almost twice as much revenue per dollar invested. And while they have always received only a paltry percentage of all VC funding, 2020 saw a precipitous decline in even those amounts, to a mere 2.3% in 2020.

This dearth of financing has a significant ripple effect on the economy. Female-founded startups employ up to 6 times more women than startups with no female founders. In an economy that is shedding women at an alarming rate, we need more not fewer women-led companies.

It will likely be some time before all the reasons for this precipitous drop are clear. Some speculate that the pandemic made investors more wary of risks and more likely to stick to their existing networks — which is very much a “boys’ club” and tougher for women to break into. And even when going outside their networks, many investors may be sticking with “pattern-matching habits,” seeking the same kinds of companies that they’ve supported in the past, which are often tech companies led by men.