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Are VC-Backed Female Founder Companies Disproportionately Impacted by the Pandemic? (Yes!)

Companies with all female founders have often faced an uphill battle vying for venture capital. While this imbalance seemed to be improving before the pandemic, companies with all male and mixed gender founder teams continued to outpace female founder companies in most VC deal markets in 2020.

Despite the pandemic, the 2020 VC deal market in the United States had an incredibly strong finish, surpassing the somewhat dire projections from last spring. However, when that strong performance is examined more closely, it appears that the pandemic may have been a perfect storm for female founders. During the pandemic, women departed the workforce at alarming rates, and this unfortunate trend appears to have spilled over into the VC world.

PitchBook’s Venture Monitor for Q4 2020 (available here) reports that only 2.7% of total U.S. VC deal value for 2020 was represented by companies with only female founders. While this figure remains consistent with 2019’s figures, the percentage of total deal value represented by companies with at least one female founder dropped from 16.6% in 2019 to only 15.0% in 2020. The total percentage of deals involving companies with at least one female founder also dropped from 2019, and other metrics – including the pre-money valuation for female founder companies – remained stagnant. The pandemic appears to have only exacerbated the access issues female founder companies have traditionally faced in reaching investors.

This isn’t the first time female founded companies have faced a setback in the VC world. For instance, in 2016, the numbers for female founder companies dropped, only to rebound in 2017, exceeding the 2015 figures and surpassing that year’s total deal value by over 30%.

As optimism for a return to normal grows with the vaccine rollout, we hope to see women returning to the workforce and for female founders to re-establish their upward trajectory in the VC world in 2021.

 

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