April 19, 2024

Female founder funding: Will it ever change?

Venture funding for all-female-founded teams has stagnated — so what next?

Amy Lewin

3 min read

This article first appeared in Sifted's UpRound newsletter, sign up here.

If you’ve been tracking the percentage of venture funding that goes to all-female-founded teams as closely as we at Sifted have, you might be feeling a tad despondent.

It’s stagnated — at a measly 2%.

And that’s despite many initiatives launching in the past decades to change things.

Take the Investing in Women Code, which launched in the UK in 2019 and hoped to support female founders by improving access to tools, resources and finance — and collecting data on how firms were doing.

Five years on, it has 240 signatories, including VCs, angel syndicates and banks — and almost nothing has changed.


So, what next?

That was the topic of a roundtable I attended in London this week. In the room were VCs, LPs, angel investors, lawyers and a female founder or two.

There was talk about getting more LPs to sign up for the Investing in Women Code (just two LPs — publicly-funded British Patient Capital and Big Society Capital — are signatories at the moment), about collecting data on VCs’ pipelines (how many female founders do they meet? how many do they receive pitch decks from? how many do they invite to IC, or take through to DD?), and about calling out the signatories to the Code who had all-male investment committees (24%, in case you’re wondering).

But then one brave soul asked: if we’ve had this code for five years, and we’ve been tracking data on the funding going to female founders for all that time and nothing has changed, don’t we need to try something different?

I couldn’t agree more. Coaching, pitch sessions and workshops for female founders are all important — but plenty of women-led startups don’t need any mentoring, they just need the money.

“Women are not the problem,” said one attendee. “The system is the problem.”

It reminded me of a brilliant piece Olio founder and CEO Tessa Clarke wrote for Sifted a few years ago. She argued that most female founders don’t need ‘fixing’; they need funding — and suggested that rather than launch yet another mentoring scheme, VCs could instead focus on ensuring their investment committees were 50% female.

Quotas aren’t for everyone — and I was told at the event that the current UK government is not a fan.

But what about dedicating pools of funding to female founders, or female-led VCs? Germany’s state-backed LP KfW Capital has already done it, with a €200m fund to back VC firms from emerging managers with gender-diverse teams. Why doesn’t the British Business Bank do something similar?

We need more women in decision-making roles at VCs to turn the tide. We need more women on startup boards and in startup C-suites. And, of course, we need bigger — and more — cheques for female founders.

And then, like so many things in VC — FOMO will do the work. Once all of the above is in place — and the next Spotify is being built by a woman — we won’t need the stick. All anyone will see is the carrot.

Amy Lewin

Amy Lewin is Sifted’s editor and cohost of Startup Europe — The Sifted Podcast , and writes Up Round, a weekly newsletter on VC. Follow her on X and LinkedIn