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How can we close the gender investment gap and move more VC money to women? Top VC investors share their five steps for increasing funding for women-led startups.
Women across the world are launching disruptive new businesses, driving technological innovation and tackling some of our most pressing global challenges.
In our 100 Women Founders to Watch list, we reveal the world’s most promising women tech founders, from pre-Seed to Series A! They’re innovating across 20+ industries from femtech to space tech, and they’ve raised more than $1.1b between them.
But, for many founders who identify as women, there are still significant challenges when it comes to raising investment. Women-only founded startups receive just 2% of venture capital funding in the US, while in Europe, startups founded or co-founded by women land only 10% of total funding.
How can we close the funding gap? We spoke to leading VC investors who shared their insider insights.
1. Increase Representation of Women in VC Firms
The data is clear: having more women in decision-making roles directly impacts funding allocation. Women investors are twice as likely to invest in women founders, making diversity in VC firms crucial for changing investment patterns.
“In the MENA region, having more women on investment committees has really helped broaden investors’ perspectives, making the whole investment scene more inclusive and diverse. Women founders often build companies that tackle problems they know firsthand, which might not always be obvious to investors.”
Noor Sweid, Global Ventures
2. Address Unconscious Bias
Research reveals a systemic challenge – investment decisions are often influenced by unconscious bias – male founders are often evaluated on their potential and are questioned about maximising growth, whilst women are scrutinised by their previous outcomes, and are disproportionately asked about risk mitigation.
These decisions need to be actively recognised and addressed. VC firms should implement accountability measures, such as tracking and reporting on the diversity of funded startups. More regulation, like California’s SB 54 law, which requires VCs to report on the demographics of the founder teams they invest in, will help drive transparency and accountability.
“While much of the dialogue on the funding gap focuses on what women founders can do to ‘move the needle’, the conversation needs to shift toward the industry as a whole. We must consider the composition of the companies receiving investment and examine how hiring processes and funding decisions can perpetuate bias.”
Yvonne Bajela, LocalGlobe
3. Expand Women-Focused Initiatives
To break the cycle of male-heavy VC networks, investors should create and sponsor dedicated women’s networks to engage, support, and connect women founders with funding opportunities and mentorship.
“If all or most of the investors and board members you have interacted with have been men, it’s pretty discouraging as a woman to want to take on the hard work and risk of starting a company and trying to get venture funding. Human nature dictates that we gravitate towards our own kinds… My advice for founders is to seek out other female founders and ask for their advice and warm introductions. The sisterhood tends to be tight because there are so few of us.”
Jessica Huang Pouleur, OpenSpace
4. Increase LP Accountability
As the primary source of capital for venture funds, LPs have significant influence in driving diversity initiatives and ensuring VCs maintain inclusive investment practices. LPs should sign up to diversity-focused initiatives, like the UK’s Investing in Women Code, and assess and discuss the gender composition of VC firms’ leadership and investment teams.
“LPs need to hold VCs accountable for how they’re spending their money. If an LP says they want 20% of their funding going to women, that will help all the way down the funding funnel.”
Priya Oberoi, Goddess Gaia Ventures
5. Widen Access to Tech Entrepreneurship
To ensure a consistent pipeline of women tech founders, it’s crucial to encourage women to pursue STEM fields and provide support as well as to develop wider entrepreneurial and leadership skills from a young age. Encouraging women to pursue STEM fields and providing support systems for women entrepreneurs, including childcare solutions, can help build a stronger pipeline of women-led startups.
“I see immense potential for female founders in sectors where innovation and impact intersect. These technology waves will take years to unfold, and we need women not only as researchers and engineers but also as operators, founders, and regulators to ensure these sectors are inclusive and innovative.”
Jeannette zu Fürstenberg, General Catalyst
Download 100 Women Founders to Watch to read more about levelling the investment landscape and discover the most promising women-founded companies.
