- Venture capital’s funk continued in the third quarter and shows no sign of stopping.
- New data from Carta shows the sparse flow of funds has had an outsized impact on women founders.
- Women-only teams pulled in 2.8% of all venture funding in 2023, the lowest tally in four years.
In the midst of a sharp pullback in venture capital investment, women founders are feeling the chill more than men.
The latest data report from Carta uses anonymized data from tens of thousands of startups on its platform to take the pulse of the funding market. This year was challenging for startups of all stripes, as third-quarter funding fell to $11.9 billion, the lowest quarterly tally in years, but Carta’s data shows the scarcity of capital has had an outsized impact on startups with women founders.
For the first time in the past four years, the share of funding going to women-only teams fell below 3%, to a measly 2.8%, for the period from January 1 to October 31.
The disparity was true across funding stages, though it dramatically worsens as companies scale up to later stages. This year, women-only teams pulled in 5.6% of capital in priced seed rounds, a slight uptick from 4.7% last year. That share fell for each subsequent round: to 3.6% at the series A, 2.6% at the series B, and 1.6% at the series C. This downtrend speaks to a continued pipeline problem.
“The mid-stage and late-stage companies of tomorrow are being founded today, and they continue to be founded disproportionately by teams made up entirely of men,” the Carta report reads.
“We’re in the middle of a perfect storm for female founders,” says Katie Stanton, a founder and general partner of Moxxie Ventures.
“Unconscious bias during a venture pullback is a big part of the problem — but unfortunately only a part of it,” she said. Other factors include a lack of affordable child care — “so more women are opting out of taking risks like starting companies,” she said — a shortage of female technical founders, and a number of investment shops focused on backing female founders shutting down.
For women, it can be lucrative to have a man by her side. Teams with women and men founders fared better than women-only teams, raising 20% of all funding in 2023, up from 18% last year.
These latest data points are indicative of the continued paucity of funding to startups founded and led by women, who have, year after year, received a mere fraction of venture capital funding. While the slight dip below 3% may seem small, it’s nonetheless a sign that the overall venture pullback is adversely affecting the progress women founders have made over the past decade to even hit that 3% mark. It also indicates how little the funding gender gap has shrunk.
The share of women founders backslides
Yet, this isn’t where the ripples of the gender gap end. The sparse flow of funds is casting another worrying shadow on the startup scene: It’s just not that women-led startups are getting a lesser share — women aren’t even hitting the launch button like they used to.
The percent of women founders also declined this year. When we look at the companies that incorporated in 2023, a whopping 87% of founders were men, marking the highest rate in the last six years.
The proportion of women founders of newly sprouted companies fell to 13% in 2023 from 15% last year.
Are you a female founder with a story to tell? Contact Melia Russell via email at [email protected].