(Photo by Margaret Roth)
The coronavirus pandemic was not kind to many entrepreneurs, especially those in the hospitality and travel business. Another group disproportionately impacted? Women seeking venture capital for their startups.
Pitchbook data for the first three quarters of 2020 shows a disparity in who got funding in the United States: Companies with at least one woman on the founding team saw a 31.3% year-over-year decline in funding, compared to 17.9% for all teams. This downturn comes after record highs in share of deals in 2019, following a decade of growth.
The early-2020 dip indicated a concerning trend: that investors — mostly white men — may have been more likely to invest in who was already in their networks, who they saw as a safer bet in uncertain financial times. As Technical.ly reported in our “Off the Sidelines” podcast episode on network effects and inequity in VC:
This kind of network effect, in which the tendency to further invest in a community gets stronger over time, can become insidious. It’s not that building a network is harmful, it’s that building a network without on-ramps for others is.
What does all that data mean for local founders, though? What has the experience of raising funding been like in this past year, especially compared to years previous — and where is the trend line headed?
In April 2021, Technical.ly is focusing extra reporting on women startup founders’ journeys and business development resources, while examining the disparities in funding, including for Black and Latinx women, who still receive less than 1% of all funding despite important gains.
In our reporting this month, expect company check-ins, founder and investor profiles and stories on venture capital trends. We’ll be asking: Are women gaining a share of investment dollars? What are the pathways for women to enter and shape VC themselves? How are women small business owners recovering from the pandemic (or not)? And we’ll be seeking out more data, like we did in 2019.
Some related stories we’ve published recently:
- Investors, be aware of these power dynamics when interacting with founders
- 5 tips for female founders from DMV investors and tech leaders
- As new SEC crowdfunding regulations go live, DC’s Goodworld is raising $500K
- Akilah Bernard on breaking into the Delaware entrepreneur community
Are you an expert we should talk to, or do you know of one? Is there a report we need to read to better explain this topic? Want to write a first-person guest post about your relevant experience, or to share some relevant resources? Let us know:-30-
Startup fundraising may have changed with COVID, but these basic principles remain
Disclosure: Technically Media CEO Chris Wink is now an LP in RareBreed Ventures
Looking back on the second season of investor education podcast Off the Sidelines
Who is an investor and how is that changing?
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