Female-Founded Startup Fundraising Disproportionately Impacted by COVID-19

PitchBook, the data provider for the private and public equity markets, has released All In: Women in the VC Ecosystem, its second annual report examining global Venture Capital (VC) investment in female-founded startups. The report, published with support from Microsoft for Startups and Beyond the Billion, shows the coronavirus pandemic has disproportionately impacted female founders and CEOs negatively, despite undeniable, long term gains in VC investment over the past decade.

Funding to female founders is down 31% from the first three quarters of 2019 while funding for all-male teams dropped by just 16% during the same period. The trend had been going in the opposite direction before COVID-19 with female founders seeing faster increases in both deals and value compared to their male counterparts in 2019.

The $13.75bn raised across 1,702 deals in 2020 represents 23.3% of total VC financing activity - a small decline from the 23.8% secured in 2019 but the first dip in over a decade. Despite 2020’s slowdown, it is worth noting 2019 was a record-setting year in terms of both the number of VC deals and dollars invested. VC financing to female-founded startups exceeded $20bn for the first time in 2019, capping off a decade that began with only $2 =bn raised in 2010.

“It is encouraging to see the impressive growth in fundraising and performance by female-founded startups over the past decade but the setbacks from COVID-19 underscore how vital it is to continue to push for gender equality in the VC ecosystem,” said Adley Bowden, VP of Research and Analysis at PitchBook.

“The report shows female founders and CEOs continue to exit faster and at higher values, which should signal to investors that diverse teams are not to be ignored. We hope clear data on the funding gaps and proven performance of female-founded startups will empower VCs and institutional investors to allocate more funds to these companies and prioritise placing women in decision-making roles within their own firms.”

Similar to last year’s inaugural All In report, PitchBook analysed investment activity in US-based startups with at least one female founder as well as VC-backed companies led by female CEOs. Analysis also shed light on funding within specific US regions and sectors, including digital health, retail, education and fintech. While some metro areas like Boston suffered less fallout from COVID-19, the total share of VC financing in female-founded startups declined as investors reassessed strategies and retained capital to support portfolio companies early in the pandemic. Despite the challenging environment, 2020 is on pace to be the tenth straight year female-founded companies exited faster than the broader market. Such consistency over time highlights strong performance of female-founded and led companies.

Key Takeaways Uncovered by PitchBook's All In: Women in the VC Ecosystem Report
  • VC investments in female-founded companies set records in 2019 with just over $20bn invested across 2,669 deals. Deal volume was up 13% year-over-year while overall value was up 9%, exceeding growth by male founders (9% and 7%, respectively).
  • Female CEOs secured 13.5% of all VC investment in the US last year. Ten years ago, that ratio was 6.8%. Deal value, on the other hand, has hovered between 5% and 7% over the past decade, suggesting that relative deal value in female CEOs has decreased over time.
  • Venture investors closed nearly 2,000 deals totaling $14.1bn with female-founded technology companies in 2019 - a remarkable jump from a decade ago when less than $2bn was invested in all female-founded startups.
  • In the VC epicentre of the Bay Area, female CEOs are raising at higher valuations versus any other market, a trend that began in 2017 and has only strengthened this year.
  • In 2020, the median late-stage valuation for female-led companies fell 7% while male CEOs saw a 27% increase in valuations.
  • A record 198 female-founded startups exited via IPO or acquisition in 2019, up from just 38 ten years ago.
  • Female-founded exits increased 16% year-over-year while male-founded exits declined by 2%. Female CEO exit value went up 30% from 2019 to Q3 2020 while the male CEO figure went down 44% in the same timeframe.
  • 2020 is on pace to be the tenth straight year that female-founded companies exited faster than the broader market. Except for the 2018, female CEOs have been exiting faster than their male counterparts, as well. Venture investors and family offices can use that data to strengthen their arguments for investing in more female-founded companies.

The full report includes the following components:

  • Records broken
  • Microsoft Q&A
  • The corner office
  • Around the country
  • Beyond the Billion Q&A
  • Industry spotlights
  • Quicker to exit
  • Exits racking up
  • Key takeaways
  • Methodology

To download the full report, click here.

Startup Details

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  • Headquarters Regions
    Seattle, Washington, US
  • Founded Date
  • Founders
    John Gabbert
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