In the venture capital industry, venture deal-making experienced a decline for the second consecutive year, and the economic downturn confirmed that 2023 was a challenging year for many. Despite these difficulties, female founders and investors managed to achieve notable success in the market. In the US, female founders attained a record-high share of the total deal value, while in Europe, they raised the third-largest amount of capital on record. Nevertheless, female founders faced obstacles that varied across different stages of venture and geographical regions.

In line with the broader downturn in exit activity within the US venture ecosystem, the total exit value for companies founded by women fell by over one-third from 2022, reaching the lowest level since 2016. Conversely, in Europe, the share of total exit value attributed to female founders climbed to 20.8%, the highest since 2017. While unicorn activity saw an increase in the US, particularly in sectors like Artificial Intelligence (AI), Machine Learning (ML), and IT, it experienced a decline in Europe, despite an increase in the overall number of European female-founded unicorns.

Angel investment in female-founded companies in the US dropped by more than half, and European angel investment recorded the lowest total deal value since 2018. The venture capital firm decision-maker landscape remains predominantly male, with fewer than 20% of US and just over 15% of European decision-makers at venture firms being women serving as General Partners (GPs).

“The VC ecosystem has seen a major pullback since it peaked in 2021, but female founders have shown tremendous resilience amid market turbulence. Female founders made significant strides in 2023 by securing a record-high proportion of VC capital in the US and near-record levels in Europe, but there continues to be a wide gap between investment in female-founding teams and male-founding teams,” said Annemarie Donegan, research analyst at PitchBook. “We know that angel investors play an integral role in offering initial opportunities for founders, especially during market turbulence. With many female investors taking a step back last year, we will continue to see the impacts on female-founded companies over the next few years. It has never been more important for female representation in the VC ecosystem and the industry has a long way to go to see true equity.”

Following the methodology of the first four All In reports, PitchBook analysed investment activity in US- and Europe-based startups with at least one female founder. The reports also include spotlights on all-female founding teams, female angel investors, and GPs, and breaks down funding activity within specific US regions and European countries. 

PitchBook tracks female founder data throughout the year in their US Female Founder and Europe Female Founder data dashboards.

Europe Key Takeaways:

Deal activity remains male-dominated, but female founders represent a growing fraction.

• European female-founded companies with at least one female founder generated a record-high proportion of total VC deal value at 20.5% and deal count at 25.8%. Their proportion of total deal value grew 36.2% from 2022 - the sharpest year-over-year uptick since 2012. 
• All-female founded companies have seen significant growth and consistency over the past several years with at least 400 deals closed each year since 2018.

Female-founded companies collectively exhibit solid investment opportunities. 

• Pre-money valuations for female-founded companies have grown markedly over the past decade, with additional momentum provided by the venture surge in 2021.
• More than three-quarters of all venture rounds closed by female founders in 2023 were based on a higher valuation than the previous round.

At the GP level, most decision-makers are male.

• Among larger venture firms with AUM of at least €50 million, 15.2% of all decisionmakers are women. For smaller firms with AUM under €50 million, the percentage of female decision-makers fell to 11.4%.

Angel investors are key early drivers of VC activity. 

• The number of female angel investors active in Europe grew materially over the past few years, though it declined by almost half in 2023, which contributed to a drop in deal flow for female-founded companies receiving angel investments.
• For the past three years, female angel investors have participated in more than a quarter of all VC deals that involved both a female founder and any angel participation.

Cumulative exit value for female founders declined for second year in a row.

• Female founders generated approximately €2 billion in total exit value each year between 2019 and 2022, but the 2023 figure fell just short of that threshold alongside a material drop in the number of exiting companies.
• Female-founded companies demonstrated the ability to exit efficiently with a median time to exit of 7.9 years, six months faster than the broader pool of companies.

US Key Takeaways: 

Deal value declines but reaches record high proportion of total US deal value.

• Female-founded companies, defined as including at least one female founder, secured a record 27.8% of total US VC deal value in 2023 - a notable increase from last year’s 18.7%. Total VC deal value was $34.4 billion, down from 2022’s $44.2 billion.
• All-female founded companies, on the other hand, represent a single-digit percentage of total US VC activity. Although they have closed more than $3 billion each year since 2018, deal value declined year-over-year from $5.1 billion in 2022 to $3.2 billion in 2023. 

Representation at the GP level grows for women. 

• For firms with AUM of at least $50 million, the proportion of female decision-makers experienced slight growth in 2023, reaching 17.4% compared to 16.1% in 2022. Among smaller firms with AUM under $50 million, the share of female decision-makers is 18.8%. 

Female angel investment stalled. 

• Due to the current state of the larger dealmaking environment, many female angel investors took a step back in 2023 and stats dropped by more than half. VC deal activity for female-founded companies with female angel investor participation totalled $1.2 billion in 2023 down from $3.7 billion in 2022.
• Similarly, deal count in female-founded companies with female angel participation as a proportion of all deals with angel participation dropped from 34.4% in 2022 to 29.8% in 2023.  

Female-founded unicorns grow, especially in AI/ML and IT. 

• The cumulative number of female-founded unicorns grew 4.7% in 2023, with more than 100 companies in the mix. 
• 2023 was a big year for companies within AI and ML and this was also the case for top female-founded unicorns.

Exit activity declined to the lowest amount since 2016. 

• Exit strategies remain on pause for most companies, and the cumulative exit value for female-founded companies declined by more than one-third year-over-year to the lowest amount since 2016. 
• With fewer companies successfully exiting in 2023 overall, female-founded companies accounted for a larger share of those that did. They reached a record 23.3% of total exit activity and demonstrated a third straight year of growth in that metric.