Female founders ended 2023 on a strong note as the year closed with the third-highest amount of VC capital raised for female-founded or co-founded startups on record, according to PitchBook’s US VC Female Founders Dashboard.
Despite this strong finish, the total amount of money raised declined for the second consecutive year.
Here are three takeaways from US VC funding for female founders in 2023 and what it might mean going forward.
US VC funding seems to be settling into a post-pandemic normal
While VC investment in startups founded by women declined for the second consecutive year, the total amount of capital raised by these companies is still markedly higher than it was before the pandemic began.
Companies with at least one female founder raised about $32.7 billion in venture funding across 3,230 deals in 2023, while startups with exclusively female founders garnered $2.8 billion over 867 deals.
VC fundraising for female-founded and co-founded startups seems to be settling into a new normal. Companies are raising more capital across fewer deals than they did before the pandemic, and the highs seen during the COVID-19 peak remain out of reach.
The majority of capital is going to companies with both male and female founders
Mixed-founder companies—those with both male and female founders—have seen their share of capital grow at a faster rate than startups founded exclusively by women.
The share of female co-founded VC capital was the highest on record in 2023, at 20.7% of total US VC funding. For female-only founded startups, however, that number was just 2%, the lowest it’s been since 2016.
Companies with both male and female founders had a historically strong year, finishing with roughly 33% more capital raised than in 2020 while also closing fewer deals. On the other hand, companies with only female founders recorded the lowest annual deal value since 2017 while closing more deals than in any pre-pandemic year.
US VC funding for female co-founded startups was concentrated in select verticals
What could explain this pattern of mixed-founder companies raising more capital over fewer deals while female-founded startups raise less money over more deals? One contributing factor appears to be that these two groups are concentrated in different industries.
Industries that accounted for significant portions of overall funding for female co-founders—such as B2B services and pharmaceuticals and biotech—did not give the same boost to companies founded solely by women.
Software was a big contributor to both groups, accounting for more than a fifth of the total capital invested this year for companies founded by men and women as well as those founded solely by women.
Pharma and bio, meanwhile, contributed 18% of capital to mixed-founder companies but only 7% to startups founded by women. For B2B services, the discrepancy was even starker, with the vertical garnering 27% of all capital raised for mixed-founder companies but only 7% for female-founded startups.
“In legal and tax, two things we invest in, we see a lot more female founders than we would see in straight B2B SaaS at Microsoft,” said Tamara Steffens, managing director at Thomson Reuters Ventures and former managing director at Microsoft venture arm M12, where she was the executive sponsor of its Female Founders Competition.
“I do see some light at the end of the tunnel because I’m seeing more female founders now,” Steffens added.
For more information and the latest data on US VC investment in female-founded companies, check out PitchBook’s US VC Female Founders Dashboard. To see how female founders are faring across the Atlantic, see the European VC Female Founders Dashboard.
Featured image by Joey Schaffer/PitchBook News
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