Across Oceans: Benchmarks on Female-Founded Startups in Europe vs the US

Ashlee Kupor
May 2, 2019 · 5 min read

The startup scene has always been ruled by men. In the past years, the number of female-founded startups has continued to rise, albeit slowly. With more commitment to promoting women in entrepreneurship, many articles have shown the difficulties and inequalities women face compared to men. However, in this research we aim to provide data-driven insights on female-founded startups in Europe compared to the US. We hope this will shed some light onto the contrasting female startup scenes across oceans.

We compared these 3 indicators of female-founded startups between Europe and the US:

(1) Prevalence across geographies

(2) Capital raised

(3) Founding team makeup (specifically in Europe)

About the Data

Our qualified data set of female-founded startups is comprised of those that:

(a) Have at least one female founder

(b) Were founded between 2013 and 2018

(c) Are VC-backed

(d) Have raised at least $5m in funding

For the US dataset, we utilized this Quartz Article and their data from Pitchbook to generate a list of 194 companies. For the European dataset, we amassed data from Dealroom composed of 151 companies, excluding Israel. All data is as of July 2018.

(1) Prevalence of female-founded startups across geographies

We first looked at the distribution of companies headquartered in different regions of Europe and the US.

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Unsurprisingly, the UK in Europe and the Bay Area in the US had the highest concentration of female-founded startups.

We then examined the geographical breakdown in Europe by comparing the location of all startups that meet the qualifications above, regardless of founder gender, to the corresponding female-founded startups.

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We found that in Europe, the proportion of all companies headquartered in a specific geography compared to just female-founded companies didn’t differ greatly. However, in Switzerland female-founded startups are noticeably more prevalent, and in France less prevalent.

(2) Capital raised by female-founded startups

Looking at the breakdown of capital raised, we saw pretty striking differences between Europe and the US.

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Although we expected most companies to have raised small amounts of capital, since the oldest companies in our dataset were only founded in 2013, Europe has a much higher percentage of companies in the smaller ranges of capital raised than the US.

In fact, the median amount of capital raised by companies in the US ($35m) is almost 3x more than their counterparts in Europe ($12m).

We wanted to try to determine whether this was because (a) female-founded startups in Europe have been struggling to raise capital compared to their peers in the US, or because (b) the number of female-founded startups in Europe has grown meaningfully later than in the US, and so naturally they’re less mature on average and have had less time to raise capital.

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However, when viewing the year female-founded companies were founded across Europe and the US, we didn’t find a meaningful difference in the age of the companies, leading us to believe the former explanation is much likelier — that European female-founded companies are generally raising less capital than their US counterparts.

When we dove deeper by examining the median amount of capital female-founded companies raised in different geographies, we again saw European companies raising much less capital compared to the US.

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Even when comparing the European geography with the highest median amount of capital raised (the Nordics) to the lowest in the US (Seattle), the median amount of capital raised in Seattle is almost double that of the Nordics.

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Specifically in Europe, we then broke down the median amount of capital raised based on whether the company had a male or female CEO.

We saw that within European female-founded companies, male CEOs raised 60% more capital than female CEOs (a median of $16.9m vs $10.5m).

(3) Founding team makeup of female-founded startups (specifically in Europe)

Next, we wanted to look closer into how the founding teams of the European female-founded companies were composed.

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We found that 21% of European companies were founded solo by 1 female, while the average number of people on the founding team was 2.8. Of the companies with multiple founders, only 2.5% were founded by all women teams.

Of the European companies with both men and women on the founding team, women only made up 1 in every 3 founders.

We wanted to dive a little deeper to see if there was a difference in the median amount of capital raised by all female vs. mixed-gender founding teams.

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We determined that when European companies had men and women on the founding team, the median amount of capital raised was 70% more compared to companies founded solo by a female founder or in a team with all women.

However, we were unable to determine whether this gap is due to investors’ reluctance to back female founders, solo founders, or both.

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We hope this research illuminates a little more of the reality concerning female-founded startups in Europe and the US. We welcome any feedback, hoping to gradually develop a more data-driven narrative on female tech founders, and inform those founders as they navigate the ecosystem.

LocalGlobe Notes

writing from @localglobevc team

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