Female founders smashed funding records in 2021 — but there’s still a widening gap

Companies started by women raised more money than ever, but are still undervalued compared to the rest of the startup market.

Businesswomen collaborating in a meeting room.

Women-founded startups have raised a record amount of money this year.

Photo: monkeybusinessimages/Getty Images Plus

The pandemic took a toll on female founders in 2020: Funding to their companies fell 3% even in a bullish startup climate that saw overall venture funding rise by 16%.

But funding to female-founded companies has roared back in 2021 and smashed existing records, according to a new report from PitchBook on female founders in the U.S. Funding to female-founded companies reached $40.4 billion in the first three quarters of 2021, far surpassing 2019's record of $23.7 billion. Investors profited, too, with female-founded firms recording an all-time high of $59 billion in exits in the first three quarters of the year.

Still, despite the record numbers, PitchBook found there is a widening gap between the overall U.S. startup market and female-founded companies.

The median late-stage private valuation was $70 million for U.S. startups in 2020, but only $59 million for female-founded companies. So far in 2021, the median for the market has jumped up to $120 million in an exceptionally frenzied market, but for female-founded companies, the median is only $100 million — nearly double the dollar gap from 2020. The gap also widened in the early-stage market, where the median startup valuation for female-founded companies trails the overall market by nearly $6 million.

 Charts showing funding to female-founded startupsCharts: PitchBook

"Funding to female founders is rebounding, and it's in line with the market growth as well," said Sarah Chen, co-founder and managing partner of Beyond The Billion, which works with funders who invest in female founders.

All-female-founded companies saw 28.1% less investment in the pandemic's earliest months of March to June 2020. All-male teams only saw a 5.4% slip during the same time period.

"In the time of a crisis, there's a reversion to bad habits," Chen said, pointing to behaviors like pattern-matching.

Chen remains "cautiously optimistic" about female founders and funders in the VC ecosystem. The gap aside, funding to women set new records, and there's also an increase in female funders. The percentage of female GPs at firms with over $50 million in assets under management rose to 15.4%, according to PitchBook's report. New York City in particular had the biggest jump among major VC hubs from 11.8% to 16.8%.

There are also plenty more active female angel investors in venture capital. In 2011, PitchBook estimated there were 125. A decade later, the number is 895 as of Sept. 30, the report said. The rise is significant not just for the investors themselves, who stand to profit from startup deals, but for who they're backing, Chen said. The research showed that female angels are backing more female founders.

The funding environment remains crazy, but unlike during the pandemic when female founders were left behind, this time the rising tide is floating all boats. Chen just cautions that the industry can't get confused by what's happening on the macro level and miss the gaps that remain — and are getting worse.

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins