➕ Southeast Asia: The numbers in 2022. 

• 1.2% of total venture funding went to female-only founding teams 
• 12.6% went to startups with at least one female founder 
• This means that over 85% of funding went to male-only founding teams

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🌏 What about the US? 

• In 2022, women-founded startups received around 1.9% of funding in the US 
• Similar to the numbers in Southeast Asia, that number is significantly higher at 17.2% when the team was mixed-gender 
• "Is this because there aren’t enough female founders?” — women now account for 40% of new US entrepreneurs. So, the funding numbers don't really quite add up

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❓VC decision-making

While there are many reasons why there is a gap in funding for female-founded versus male-founded startups, whether it be societal norms or systemic issues, there is no doubt that the VC decision-making process plays a role.

At the earliest stages of a startup's fundraising journey — I'm talking about pre-seed or seed — you can almost always hear VCs say something along the lines of "it is the founder that really matters."

Heavy emphasis is placed on the VCs' assessment of the founder(s). This includes everything from their perceived founder-market fit, past experiences, and qualifications to how well the founder was able to pitch in meetings.

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🧠No direct gender bias 

A study found that being a woman entrepreneur does not diminish investor interest. In this case, outcomes from a pitch competition were analyzed, and researchers found no direct bias against women by the VC judges. 

Then, why is venture capital overwhelmingly provided to startups led by men? The answer is implicit bias towards gender stereotypes. 

While there was no direct bias against one’s gender, founders who exhibited qualities associated with femininity during their pitches were less likely to be selected. 

“VCs, it seems, are not biased against women based on their sex when pitching, but VCs are biased against displays of femininity that may be more typical or natural for women to demonstrate” (Balachandra et al., 2019).

• In this study, feminine qualities refer to qualities such as “warmth, sensitivity, expressiveness, and emotivity.” 

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💰 Gendered markets

There is an added layer of complexity to these biases. Studies found that male VCs are biased against ventures targeting female markets (i.e., when the product is built or created for a female user base). 

A good example of this is Spanx — the women’s shapewear company. Now valued at $1.2B USD, the founder, Sarah Blakely, often tells stories about how challenging it was to convince men in the industry to invest. It took her over two years to raise funding!

It also must be noted that both male and female investors have an (implicit) preference for ventures that they are able to relate to at a personal level. Given that the industry is dominated by male decision-makers, these biases make a huge difference when it comes to where funding goes.

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▶️ Solutions 

• Consciousness and awareness about these biases and being more intentional about how funding decisions are made and where funding goes 
• Bringing more female investors to the table — “they are more likely to invite ventures led by women and focused on female markets to pitch to them for funding consideration,” which is important under the lenses of these implicit biases that exist!