The tech industry as a whole is overwhelmingly male, and when it comes to startups run by women, the numbers are especially disheartening: According to a recent report from Babson College's Diana Project, only 2.7 percent of U.S. companies that received venture capital funding between 2011 and 2013 had a female CEO. And it can be even more difficult for female-led seed stage startups to secure the often-elusive, yet essential, Series A round.
Sobering statistics like these have been fueling cynicism that the industry will remain gender lopsided. But new research is showing that we may be making headway.
The times, they are a changing
A TechCrunch report, which analyzes CrunchBase data, revealed that 10 percent of the U.S. startups that raised Series A rounds in 2014 were founded by women—double the percentage in 2013. For Massachusetts in 2014, 7 percent of startups were founded by females; and though that may not seem like much, it's a promising bump from just 2 percent a year prior. Female-founded startups in the Bay State also secured 90 Series A rounds last year, up from 81 in 2013. The report demonstrates that Ohio, Florida and Maryland show the most progress, with more than 20 percent of Series A rounds raised by female founders.
Still, it’s obvious that the road to entrepreneurial equality is still a long one—though these figures indicate that it's becoming increasingly feasible for women to break into the tech ecosystem.
“Anyone who says they can’t find good women entrepreneurs to invest in is not looking,” Susan Lyne, who recently stepped down as AOL’s Brand CEO to launch female-focused VC fund BBG Ventures, told TechCrunch.
Better resources for success
BBG is just one example of new funds that is specifically seeking women entrepreneurs. New York-based Female Founders Fund, for example, has closed 13 deals for female-led companies since launching in 2013.
Founder Anu Duggal told the Wall Street Journal that the firm writes checks between $50,000 to $150,000, and invests in rounds that are typically about $1 million in size. Many of the seed-stage startups in its portfolio have already have gone on to raise Series A rounds, or are in the process of doing so—like New York's Manicube, an alum of the PayPal Start Tank in Boston that pulled in a $5 million Series A round last year led by Bain Capital Ventures.
Female Founders Fund reiterated on their blog that 2014 marked a milestone year for women entrepreneurs attempting to secure venture capital, citing several encouraging factors. Most importantly, the company noted that women are finally taking advantage of the increasingly affordable technologies available to them to “build scalable and successful companies with a different skill-set than was pre-requisite ten years earlier.”
UC Berkeley’s Intro to Computer Science course had more female than male students enrolled for the first time ever.
While the increase in Series A funding for female-led startups provides some proof of improvement, there’s other supporting evidence that the tech gender gap may gradually be closing. TechCrunch reported that this year, UC Berkeley’s Intro to Computer Science course had more female than male students enrolled for the first time ever. Seeing as the lack of women pursuing a STEM education has played a major role in the shortage of female entrepreneurs, this development could mean the pipeline problem will eventually diminish.
And others in the industry are optimistic. In an interview with Business Insider, Canadian Version One Ventures founding partner Boris Wertz, noted that he’s seen a "drastic increase" in women-led startups. Half the companies he invested in over 2014 are led by women, and 25 percent of Version One's overall portfolio has a woman founder. Though Version One’s investments only represent a small pool, Wertz said that there are several reasons to be confident about a turnaround on a national scale. For one, he pointed out that costs of launching a startup are now lower for everyone, which gives women a better shot of getting their startups off the ground before seeking investment. Wertz added that more women are pitching a broader range of startup ideas, which boosts their chances of securing funding, and they’re also getting better at managing their investment money once they get it.
Image of female entrepreneur via Shutterstock.
