In 2024, female founders in the US venture capital (VC) ecosystem secured $38.8 billion in funding, marking a 27% increase from the previous year. While this marks a significant achievement, female entrepreneurs continue to receive a smaller share of venture capital deals in both number and value. This continued disparity reflects broader structural challenges faced by women in the venture capital space. A report from data provider PitchBook sheds light on these trends, offering insights into how female founders performed in comparison to their male counterparts, as well as the obstacles they continue to face in the journey to equity and access.
This article aims to provide a thorough exploration of the current state of female founders in the US VC ecosystem, analyzing the progress made, the persistent barriers, and the future outlook. By focusing on recent data and expert opinions, we will explore the ways in which the landscape is evolving, how sociopolitical changes are influencing funding trends, and the strategies that can help female founders overcome the challenges they face.
The PitchBook Report: Key Findings
PitchBook’s 2024 report, “All In: Female Founders in the VC Ecosystem,” offers a comprehensive look at the state of female entrepreneurship in venture capital. According to the report, female founders raised a total of $38.8 billion in funding in 2024. While this figure represents a 27% increase from the previous year, it still highlights a significant gap in the distribution of VC funding when compared to male-led startups. Female founders continue to capture a smaller percentage of total deal value and deal count, which remains a persistent issue in the venture capital space.
In 2024, female founders’ share of deal value declined by less than 1%, settling just below the 20% mark. This is notable given the typically volatile nature of deal value, which is often influenced by broader market dynamics. Despite the challenges, PitchBook notes that the long-term trend lines indicate gradual progress toward parity, although the road ahead is still long.
The report emphasizes that sociopolitical factors, such as renewed actions against diversity, equity, and inclusion (DEI) initiatives and environmental, social, and governance (ESG) trends, might have a substantial impact on the trajectory of founder demographics in the US. These changes can influence the availability of capital for female founders, further complicating the funding landscape for women entrepreneurs.
Uneven Progress Across Stages and Sectors
While female founders saw an increase in the overall amount of funding raised in 2024, the distribution of this funding was uneven. Notably, later-stage companies and specific subsectors such as software and healthcare experienced notable gains in funding momentum. These industries have historically attracted more capital, and female entrepreneurs in these sectors were able to capitalize on growing investor interest.
Another key finding from the report is the rise in the number of female-founded unicorns. In 2024, 13 companies led by women crossed the coveted $1 billion valuation threshold, a significant achievement in the venture capital world. This indicates that, despite the challenges, female founders are making strides in scaling their businesses to the level of market-leading firms.
Additionally, female founders accounted for a record 24.3% of the total US VC exit count in 2024. This is an encouraging sign for investors who partner with female entrepreneurs, showing that women-led companies are successfully achieving liquidity events and providing returns on investment. However, PitchBook notes that the path through the VC career ladder remains slow, with promotions often taking several years to materialize, meaning that the full impact of these improvements may take time to show in the broader statistics.
Structural Disparities in Access to Capital
One of the most critical takeaways from PitchBook’s report is the continued structural inequality in the venture capital ecosystem. Despite the growing amounts of funding raised by female founders, they continue to receive only a small fraction of the total VC capital. Kristen Craft, Vice President at Fidelity Private Shares, highlighted this persistent disparity, noting that over the past decade, women-founded startups have secured only around 2% of all VC funding, despite research showing that female-led companies often outperform their male-led counterparts in terms of revenue generated per dollar raised.
This stark contrast between performance and funding allocation underscores a critical issue in the venture capital industry. Female entrepreneurs continue to face disproportionate challenges in securing early-stage capital, a crucial factor in the growth of startups. Craft points out that women are often denied access to the same resources, networks, and mentorship opportunities that their male counterparts can access, creating a significant barrier to entry for many aspiring female founders.
The Three Big Needs for Female Founders
According to Kristen Craft, there are three key areas where female founders need more support in order to achieve equity in the venture capital ecosystem:
Access to Capital:
Despite incremental progress, female founders still face significant barriers in accessing the capital they need to scale their businesses. This gap is particularly evident in the early stages of venture funding, where women are less likely to receive the same levels of investment as male founders. Craft argues that increasing access to capital is one of the most pressing needs for female entrepreneurs.
Access to Talent and Connections:
Female founders also face challenges in tapping into the talent pool necessary for scaling their businesses. In many cases, women lack the networks and connections that can help them attract top talent and advisors. This limits their ability to build strong teams, which is essential for the success of any startup. Craft emphasizes the importance of creating more inclusive networks that can help women navigate the often male-dominated venture capital space.
Access to Information:
First-time female founders often face a steep learning curve when navigating the world of venture capital. The lack of access to information about the funding process and the best strategies for scaling a business can result in wasted time and missed opportunities. Craft advocates for more resources that can help female entrepreneurs understand the intricacies of fundraising and business development.
The Impact of Sociopolitical Changes on the VC Ecosystem
The changing sociopolitical climate in the US has had a significant effect on the venture capital landscape. In recent years, there has been increased pushback against diversity, equity, and inclusion (DEI) initiatives, as well as a growing skepticism around environmental, social, and governance (ESG) factors. These shifts have created an uncertain environment for female founders, whose businesses may be disproportionately impacted by changes in funding priorities.
As DEI and ESG initiatives face scrutiny, the trajectory of women in the venture capital ecosystem could experience setbacks. Female founders may find it more challenging to secure funding, particularly if investors shift their focus away from diversity-oriented strategies. However, PitchBook’s report suggests that the long-term trend toward gender equity in venture capital remains intact, even as external factors present new challenges for women entrepreneurs.
Looking Ahead: The Future of Female Founders in VC
While the journey toward gender equity in venture capital is far from complete, the progress made in recent years is encouraging. The growth in funding for female founders, the rise in unicorns, and the increasing share of exit activity are all positive signs that female entrepreneurs are gaining ground in an otherwise male-dominated industry. However, the challenges remain significant, and more work needs to be done to ensure that women have equal access to capital, talent, and information.
For the venture capital ecosystem to become truly equitable, it will require systemic changes that address the root causes of the funding disparity. This includes increasing access to early-stage capital for female founders, fostering inclusive networks that connect women with the resources and expertise they need, and creating a more transparent and supportive funding environment for first-time entrepreneurs. The continued advocacy for DEI and ESG principles will also play a crucial role in shaping the future of female founders in the VC space.
Frequently Asked Questions
How much funding did female founders receive in 2024?
Female founders in the US received $38.8 billion in funding in 2024, a 27% increase from the previous year.
Why do female founders receive a smaller share of VC funding?
Despite significant progress, female founders still face systemic barriers such as unequal access to capital, networks, and resources, which contribute to their smaller share of VC funding.
What sectors saw the most funding for female founders in 2024?
In 2024, female founders in later-stage companies, as well as those in the software and healthcare sectors, saw the most significant funding growth.
Did female founders experience success in terms of exits in 2024?
Yes, female founders accounted for a record 24.3% of total US VC exits in 2024, signaling strong returns for investors backing female-led businesses.
What is the current share of venture capital funding for female founders?
In 2024, female founders held just under 20% of the total deal value, though the share fluctuates due to market conditions.
Why are female-led startups underfunded despite high performance?
Research shows that female-led startups often outperform male-led ones in revenue generated per dollar raised, but structural barriers, biases, and lack of networks continue to limit their access to capital.
What needs do female founders have to succeed in venture capital?
Female founders need increased access to capital, stronger networks and connections, and more information on navigating the funding and startup process.
What is the trend for female founders in venture capital?
While female founders still receive a smaller share of VC funding, long-term trends suggest gradual progress toward equity, especially with growing awareness of diversity and inclusion in venture capital.
How has the political and social climate affected female founders?
Shifts in sociopolitical views, especially concerning diversity, equity, and inclusion (DEI) initiatives, may impact the funding and trajectory of female founders in the US.
How many female-founded unicorns emerged in 2024?
In 2024, 13 female-founded companies reached a $1 billion valuation, marking a significant achievement for women entrepreneurs in the venture capital ecosystem.
Conclusion
The venture capital ecosystem in the US is evolving, but the path to full equity for female founders remains long. In 2024, female entrepreneurs raised a record amount of funding, but still received a smaller share of total deal value and count. Despite these challenges, the broader trend suggests that progress toward parity is being made, albeit slowly.
