Industry overview: female founders
The industry has a problem, and we all know it. We see countless LinkedIn posts, events focusing on the topic, and podcasts discussing it, and yet the issue remains. Female funding is one of the most talked about topics, yet female founders are still severely underfunded. We all know the statistic that only 2% of venture funding goes towards female founders, and this is where the number has sat for a while.
Female founders continue to change the shape of the startup ecosystem, paving the way of innovation, yet systemic gaps in capital, networks, and representation remain. It’s obvious that things need to change in the industry.
This industry overview aims to shine a light on the issues in the market, but also the highlights, to show not all is doom and gloom for the female tech founders out there.
The statistics
Funding is the big hitter when it comes to discussing the industry for women. The statistics surrounding female founder funding can be bleak, but there are glimmers of hope.
According to Female Founders Fund, whilst female funding stagnated at 2%, female-led exits nearly doubled. VC exits grew from 13% in 2014 to an all-time high of 24% in 2024 after four consecutive years of growth. However more recently in a study published in September 2025, Evelyn Partners found that women exit their businesses for 25% less than their male counterparts. The research study shows that male business owners exited at an average of £5.2 million, compared to £3.9 million for female-owned businesses. These statistics highlight a paradox in the market. While more women are successfully reaching an exit, the financial outcomes continue to lag behind male peers.
Female Founders Fund also found a 7x jump in female-led IPOs. In 2024, only two IPOs were led by women, which accounted for less than 1% of the total amount that year. However, by 2024 that number rose to 14, representing nearly 9% of all IPOs.
According to Female Foundry’s Female Innovation Index 2025, 1,196 European female-founded startups raised €5.76 billion through 1,305 deals in 2024. While this marks a 12% drop from the €6.56 billion that was raised in 2023, the decline is in line with the broader 11% decrease in venture capital funding deployed across European companies of all genders. The index also found that female-led startups demonstrated particular strength at the seed stage, with 20% successfully progressing to Series A, compared to 18.9% across the broader European startup landscape.
Overall, funding round sizes for female-founded companies grew by an average of 7% across all stages. While early-stage (€0-€4 million) deals dropped by 29%, larger rounds remained stable or increased:
- €40 million-€100 million rounds: slight decline (-1.51%)
- €100 million-€250 million rounds: surged (by 41.72%)
Female led startups deliver more revenue and are a safer bet for investors. First Round Capital have reported that companies with at least one female founder performed 63% better than their all-male founding teams. Female-founded companies generate 78 cents of revenue for every dollar raised, compared to just 31 cents for male-founded startups, and founders with greater gender diversity generate 30% higher returns at exit. And this makes sense when looking into how female-founded companies spend capital. Female-founded startups burn a lot less cash, showing that there is no need to overspend to scale a startup. According to Pitchbook’s ‘US All In: Female Founders in the VC Ecosystem’ report, female-founded startups consistently maintained lower burn rates than the broader VC market – rising from $0.18 million to $0.27 million/month, compared to $0.21 million to $0.32 million for all US startups. Female founders are consistently doing more with less. This is of course a good thing, but in an industry where female founders are consistently getting less funding, it is a necessity.
Looking at the decision makers
So why does this gap exist? It is time to look at the decision makers and those writing the cheques.
Many investors are still betting on repeat founders, or those that fit into a ‘traditional’ mould, which for them often falls into the white and male category. The bias is reflected in the data, over the last three decades, startups with all-female founding teams secured just 2.4% of venture capital, a share that has barely shifted over time.
There remains a gap between investment decision-makers at VC firms, and the recipients of venture capital funding. According to Harvard Kennedy School, currently in the United States, women make up approximately 11% of investing partners at VC firms, and only around 13% of venture capital dollars go to startups with a woman on the founding team. These stats are so linked due to a bias in who is being funded. A research article titled ‘Evidence that investors penalize female founders for lack of industry fit’ showed that female-led startups that cater to ‘male-dominated’ industries receive significantly less funding and lower valuations. This is not due to quality but perceived misalignment between the founder’s gender and the industry. Contrastingly, male-founded startups are consistently funded across industries.
However, research has shown that VC firms with 10% more female investing partner hires make more successful investments at the portfolio company level, have 1.5% higher fund returns, and see 9.7% more profitable exits. So it is in the best interest of venture capital firms to get more women into cheque writing roles.
But it is beginning to look promising. Female Founders Fund found that women now hold 17% of decision-making roles at US VC firms, which is almost triple the 2014 statistic.
In the UK earlier this year, British Business Bank announced it was dedicating £400 million into a new Investor Pathways Capital initiative which will support diverse and emerging fund managers across the economy and make it easier for new entrants, particularly those from underrepresented groups, to break into venture capital. This opens the door to new perspectives in the funding space, which in turn, will hopefully help start levelling the playing field for diverse founders looking for funding.
It’s true, the industry isn’t the best for women, and that’s even before diving further into the statistics surrounding female founders of colour. But as more people continue to shine a light on the issue, and put pressure on decision-makers, these statistics will slowly begin to change.
This article originally appeared in the September/October 2025 issue of Startups Magazine. Click here to subscribe
