Jane VC Founder Survey Reveals Inequities in Tech Start Early
We know you’re familiar with this statistic, but it’s worth repeating: In 2017, female founders in America received just 2% of venture capital dollars (that’s $1.9 billion of an $85 billion pot). Despite this funding gap, a 2018 study by Boston Consulting Group found that women-founded startups produce twice the revenue.
Striking as these statistics are, even in the age of #MeToo it’s all too easy for the venture world to sigh in disbelief, then move on with our (extremely busy) lives. Distraction is normal. What’s worse is feeling defeated. If systemic, statistic exposure of inequalities isn’t enough to change tech, what is?
The solution isn’t simple, but at Jane VC, we believe it’s attainable. Self-awareness is the first step, and filling in these blind spots is the goal of Jane VC’s Early Stage Founder Survey, one of the largest and widest-ranging surveys of what early stage founders want and need across the US and Europe. For this survey, we interview over 500 founders, 82% of whom are female, and 71% of whom live in America. 64% of these founders identify as white, and 41% of them are ages 31–40. At the time of responding, one-third of founders were not venture backed, one-third were at the pre-seed/angel stage, 24% were seed stage, and 8% were post-seed or beyond. (Full explanation of the survey methods available upon request.)
What did we learn? Inequalities in tech #StartAtSeed.
We’d love to kick off this report with a quote from one of our survey respondents:
“We need to give women equal benchmarks to men,” writes Ashley Wellington-Fahey, Co-Founder and CEO of The Relish. “We need to be willing to take equal risks on women as we do men. We need to be willing to believe in the audacity of female founders’ ideas, models and markets the same way we do men. We need to be willing to call out when we’re not doing this.”
This last sentence hit us hard, too. As audaciously as we promote gender equality, we need to interrogate our own blind spots. What does it really feel like, post-#MeToo, to cold email a VC, as a female founder with no connections? What do founders who are also mothers need from their advisors? What does it feel like to negotiate as a black woman in a room of white men? How do these experiences diverge across founders of different ages, races, abilities, classes, sexualities, education and regional identities?
Below is a synthesis of our most notable findings, which we look forward to discussing in pursuit of meaningful solutions.
Women aren’t just raising less…they’re raising way less
Per our survey results, on average, male founders had raised $1.4 million in venture funding, while their female counterparts had raised just $518,000. When you dig deeper into the stats for women of color, the contrast is even more stark. Women who identified as Latina raised an average of $364,000, women who listed themselves as Asian raised $330,000 and women who described themselves as Black raised only $34,000. This is consistent with the fact that since 2009, only 0.0006% of venture funding has gone to black female founders.
Said differently, for every $1.00 raised by men at the early stage, women raise an average of $0.38. Black women raise just $0.02.
What does this difference mean for a seed stage founder? For the average man, seed funding means a team, an operating budget and cushion for a pivot or two before finding the elusive product market fit. For the average woman, it likely means an outsourced team and an office in the local Starbucks. For the average black female founder, there aren’t even the resources for a single at bat.
Digging deeper, male founders had pitched an average of 48 investors, while female founders had pitched 27. A simple explanation of funding imbalances would be, “Well, women just need to pitch more!” but in reality, most venture capitalists require a warm introduction to reach them. These results ought to illuminate a profound imbalance in network access, connections and introductions between the sexes.
Female founders suffer from a systematized lack of support
For entrepreneurs, community is an essential source of support and conviction. Hackneyed as it sounds, it takes a village. Especially when you’ve received ten no’s in one week, your beta tests are floundering and your kid has the flu.
Female entrepreneurs who’ve found supportive communities — amongst other founders or investors — attribute much of their success and happiness to these networks.
“When I decided to start my company I was ill prepared for the world of venture funding,” writes Kistein Monkhouse, Founder and CEO of Patient Orator. “I also wasn’t clear on what I was building, nor was I equipped with the resources or network for the venture capital world. I’m optimistic because I’ve since built a community of supporters, identified the problem I’m solving and have more knowledge on the process of venture funding.”
Unfortunately, the majority of female founders don’t share this experience. While 67% of male founders feel supported by the entrepreneurial community, only 48% of women and 39% of black women feel supported.
What’s worse, neither male nor female founders at the early stage feel well supported by the venture community. Only 19% of men and 8% of women described feeling supported by venture. The one group that did feel supported by the venture community was late-stage male founders, with 43% feeling supported, suggesting that the feeling of support only comes once significant funding has been raised.
Age is a handicap in tech, especially for women
Sexism and racism are frequently discussed within the tech community, for good reason. However, most investors and entrepreneurs are eerily silent about ageism. That’s an issue, as a wide-ranging survey of US startup founders conducted by First Round Capital found that 37% of founders say age (above both gender and race) is the strongest investor bias. What’s worse, these founders say ageism in tech starts at the ancient age of 36.
Our survey confirms the influence of ageism. Interestingly, while the amount of capital female founders raise doesn’t spike until their late 30s — perhaps evidencing the pregnancy penalty — it peaks shortly thereafter, at around age 41–45.
As Drea Gunness-Groeschel, Founder and CEO of Beautiac, wrote, “I’m pregnant, and let me tell you, the comments I’ve gotten! As if that means my brain is no longer oriented towards business. But I tend not to be interested in the walls in front of me and more focused on the horizon I can see.”
For male entrepreneurs, capital raised spikes a bit earlier, between ages 31–35, and remains high through their mid 40s. However, after age 45, capital raising seems to go downhill for both male and female founders; both raise substantially less and feel less supported by the venture communities as they near 50.
For women, gender is a conscious disadvantage
Given the stark differences in funding and support felt by early stage female founders, it’s no surprise they don’t feel their gender is a strength. Among the myriad reasons female founders are not successfully pitching male investors at scale is because their gender handicaps them in the eyes of investors, whether or not those investors admit it.
Our data supports this claim: While 60% of male founders say their gender has been an advantage as an entrepreneur and while fundraising, a staggering 55% of female founders say their gender has been a disadvantage.
“There are obstacles to being a woman founder. You are definitely underestimated. You have to prove your worth to investors and partners,” says Naureen Anwar, CEO of NameShouts, echoing the concerns of many. Thankfully, while she admits “it’s a harder climb for us,” she’s grateful “there have been more opportunities opening up to us because of our gender,” like Jane VC, BBG Ventures, Female Founders Fund, Precursor Ventures, Able Partners and All Raise.
Where men see progress towards equality, women raise brows
Given the divergence between men’s and women’s impressions of their gender’s influence, it’s hardly surprising that the state of gender equality looks a lot more rosy for men than it does for women. Per our survey results, 52% of men are optimistic about the general environment for female founders in entrepreneurship and venture capital, while just 39% of women share this optimism.
What’s more, despite the spike in female-focused funds and media coverage of female investors, only 49% of women feel more optimistic about their ability to raise capital than they did one year ago.
For many of the women surveyed, internal self-confidence is the only reliable driver of perseverance.
“I feel that if we were given the chance to prove we can run a company, we could accomplish the same or more than men in the same position,” writes Angela Looney, Co-Founder of The Looney Group. “I definitely know that if given the chance, no matter how small, I will succeed in running my company and ensure others around me succeed with me. I just need someone to believe in me as much as I do.”
What female founders need to be successful
As people with a vested interest in dismantling gender inequality, our highest priority should be listening to what female founders say they need to be successful. For women, the priorities are an investor to lead her round, help negotiating said fundraising process and relevant advisors (again, that notion of a supportive community).
As Dipanwita Das, Founder and CEO of Sorcero, writes, “With help from our advisors and investors, I have now been taught how to answer questions correctly, navigate investor fears and really understand the intent behind their questions. I have also received a lot of guidance on how to take a question on risk and turn it into a question about opportunity. These things have helped. Lastly, once you have raised a certain amount of money, it gets easier to raise more…”
A final note
We can all agree there is a problem to be solved in tech. By fixing the inequality for women, people of color and older founders, we believe the startup ecosystem will become dramatically more innovative. We need a variety of viewpoints at the table, and a massive opportunity exists to serve a more diverse group of customers throughout the world.
Unfortunately, growth stage venture firms are limited in what they can do to solve this problem; by then the pool of diverse founders to invest in is small. At the pre-seed and seed stage, innovation is happening everywhere and is led by all different types of people. To maintain this diversity throughout the tech ecosystem, we need to #StartAtSeed.
Before stepping away from the data, we want to leave you with a final note: Awareness of gender inequity shouldn’t translate to pity. Jane VC was created because we see tremendous market potential and business opportunity in female founders’ ideas — this is not a charity. The data is clear: Women run more profitable businesses. They also burn less money and deliver higher returns to investors.
We’ll leave the final word to Adrianne Stone, founder of Stockabl: “I see a lot of articles and discussion about how difficult it is for female founders. Our biggest competitor is an all-male team, and they have raised a lot of money, and I worry that I won’t be able to match them because we are at a disadvantage, being all female. But I’m also like… screw that. I’m proud of what we are building and don’t plan on letting my gender get in the way of that or other people’s expectations. I’ve never let it stop me before.”
This is just the start of an ongoing dialogue about solutions. Join the conversation with #StartAtSeed.