Common stat on VC funding for women misses the full story

What you probably already know: You’ve heard it before: Women entrepreneurs receive less than 2% of venture capital funding. But that doesn’t tell the whole story. A new study put out by early-stage investment firm Golden Seeds found that women entrepreneurs now represent more than 30% of the angel-funded companies in the U.S. In a piece in Fast Company, the co-CEOs of Golden Seeds, Jo Ann Corkran and Lorette McCarthy, explain why this ubiquitous but misleading statistic has dominated the discussion on women-led startups, and why it has hindered more improvement in the sector.

Why? The 2% statistic, put out by Pitchbook, includes only data on the gender of company founders and excludes women in top executive positions who may also have substantial equity stakes in the companies they lead. It also does not include gender-diverse founder groups where at least one founder is a woman. If those are included, then the figure jumps to 23% of all venture capital goes to companies with at least one woman founder. That is up from only 9% of gender-diverse founding teams that received venture capital investments back in 2009.

What it means: “The growing presence of gender-diverse teams signals a positive shift in the funding landscape, as startup investors increasingly recognize the benefits of diverse leadership in driving business success,” Corkran and McCarthy wrote. Additionally, the number of women founders seeking angel investments has skyrocketed. In 2023, 46% of the companies that sought angel backing were women-owned, a jump from only 5% in 2004. That’s aided by the fact that now more than 40% of the angel investors in the U.S. are women and women-owned businesses represent 39% of all U.S. companies.

What happens now? The authors emphasize that continued advocacy and accurate representation of data “are essential in shaping mindsets and initiatives that support women-led businesses.” They caution against perpetuating the narrative that women receive only 2% of funding, as that can be self-defeating and leave many women founders feeling like it’s not even worth trying. Meanwhile, companies and firms are increasingly walking back previous diversity initiatives as they come under attack from the Trump Administration.