SOSV’s Female Founder Story by the numbers
As one of the most active seed investors in the world, SOSV’s rapid pace of investment means that we have been lucky enough to work with over 1400 entrepreneurs over the last 7 years.
We were (pleasantly) surprised last year when crunchbase published its first report on women in venture capital (2016) and named us a top investor in female founders. Techcrunch released the 2017 update earlier this month, naming SOSV as #2 seed investor for highest percentage of female founders in portfolio and #3 in overall number of female-founded companies in our portfolio.
The report’s release has also spurred a deep dive on our own internal data to see how we stack up against the industry norm, and where our female founders are concentrated by vertical and geography. Below is some of what we have learned, based on our internal data tracking.[1]
Leading investor in female founders
Between 2012 and Q3 2017, SOSV invested in 240 women across 195 female-founded startups.This puts us in the top three most active seed investors in female-founded companies, and roughly on par with Y Combinator. This represents approximately 1/3 of our portfolio, and puts us at #2 of VCs with the highest proportion of female-founded companies in their portfolio.[2]
Interestingly, as SOSV activity has grown its accelerator model across geographies and verticals, our rate of investment in female-founded companies has remained (unintentionally) consistent at ~30%.
Over the last 7 years, approximately 1 in every 3 companies that SOSV has invested in has been female-founded, and the total number of female founded startups has been increasing every year
In addition, Techcrunch reported that “10% of venture dollars globally between 2012 and Q3 2017 went to startups with at least one woman founder…[and] 16% of seed dollars globally between 2012 and Q3 2017 went to startups with at least one woman founder.”
Based on our analysis of actual investment allocation over the last 5 years, 25% of all SOSV investment capital — $1 in every $4 — has gone into female founded companies, with that ratio increasing to 28% each year over the last 3 consecutive years. This is nearly 10% more than the global industry average for seed round investment.
In the last 5 years, $1 in every $4 of SOSV investment has gone into female founded companies
Similarly, 29% of SOSV’s 1300+ investment rounds have been into female founded companies, a 10% increase on the industry average of 18%. Notably, the number of rounds into female founded companies has been increasing steadily as our accelerator model has scaled, with over 130 rounds into female founded companies in 2016.[3]
Do female-founded companies stack up?
There is much discussion in our industry as well about whether female-founded companies actually out-perform their all-male counterparts.
Given that SOSV runs accelerator programs and works with very early stage companies, we will have to wait a bit longer for our portfolio to mature before we can provide definitive numbers around revenue and exit valuation performance. However, we had an initial look at the progress that our companies have made to date in achieving follow-on financing:
- In general, we found that our female-founded companies performed just as well as our portfolio companies with all male founding teams.
- Female-founded companies account for 29% of the upticks across the portfolio (where multiple on SOSV investment>1x), while they represent 32% of the overall portfolio composition.
- Looking more closely, 30% of the companies who have raised a Series Seed round have been female founded, broadly in line with the 32% expected across all of our holdings.
- At the Series A level, this drops to 26%, which is slightly lower than the expected 32% across the portfolio, but the sample size is significantly smaller (27 rounds, as compared to 140 series seed rounds), and given that we have invested in 67% of our female founded companies in the last three years, clearly the majority of our female founded companies haven’t reached the Series A level. This is an important metric that we will continue to track moving forward as the portfolio matures. [4]
Female founders concentrated in life sciences & food
If we take a deeper dive into each of our core verticals, we see where female-founded companies are concentrated. Specifically, the highest percentage of female founders are in our Food-X accelerator and life sciences accelerators (IndieBio and RebelBio), with 48% and 41% of companies graduating from these accelerators being female-founded (check out Maria Soloveychik of Synthex).
The lowest rate of female founders is in in the hardware vertical, with just 1 in 4 SOSV hardware companies being female-founded. However, we cannot ignore the many notable female founders in the hardware space, including a rundown here, and an interview with material science engineer and hardware entrepreneur Rhona Togher from Restored Hearing. SOSV’s cross-border internet companies, focused heavily in SaaS and app development, have 36% female-founded companies, and have become focused on female founders in recent years — checkout a rundown of their stats here, and female founder spotlight with Elyse Ribbons from Geili Giving.
Interestingly, this disparity between the hardware/computer science — focused verticals and the life sciences/food areas is reflected in broader research on disparities of womens’ participation across various STEM fields. Fewer women enter engineering and manufacturing than science and technology fields globally [5]. Women also obtain more than half of US undergraduate degrees in biology, chemistry and mathematics, yet they earn less than 20% of computer science, engineering, and physics undergraduate degrees (source).
Global reach of female founders
The other differentiator for SOSV is our truly global footprint. With over 1400 founders from 72 countries, our 240 female founders hail from 33 countries on 5 continents. Based on raw numbers, just under 50% of SOSV female founders are from North America, with another 28% coming from Asia. However, when we look more closely at the percentage of female to male founders by region of nationality, Central/South America, Southeast Asia, and China emerge as the most female-dominant geographies.
Conclusions
While SOSV simply aims to invest in the strongest teams with the best potential & products, we are still proud to be supporting over 240 women entrepreneurs around the globe, who are building world-changing companies in life sciences, hardware, food, and cross-border internet.
We strongly commend Crunchbase and Techcrunch for taking on this annual analysis of our industry, holding firms accountable to their investing practices. SOSV is only one (very active) data point in the VC industry, but consistent data reporting lets us begin to see how we fit into the broader landscape. Check out all of our SOSV female-founder stories here.
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[1] SOSV was not included in the initial release of the report, because a change in methodology from 2016 excluded firms with <75% of portfolio companies’ data. We have since updated data on our 640+ companies’ founders. Despite this, there may be some discrepancies between what is reported in Crunchbase vs. our internal tracking, as founders self-identify on the Crunchbase platform.
[2] We use the same methodology as Crunchbase whereby a company is considered “female founded” if it has at least one female founder. Crunchbase reports 174 SOSV female-founded companies vs. SOSV’s internal data has 195. 195 female-founded companies puts SOSV at #2 above Y Combinator’s 187, however SOSV is still significantly higher than both 500 Startups and YC by percentage of total portfolio (25% & 20% respectively versus SOSV’s 37%). Crunchbase reports that 36.79% of the portfolio is female founded compared to our internal reporting of 32%, a discrepancy likely due to a handful of our male-only companies who are not on the Crunchbase platform.
[3] There have been 83 rounds into female founded companies as of Oct 1 2017, with a projection of over 110 rounds by year end.
[4] Series Seed round is defined as $300k-$5m round raised, either equity or through convertible loan note or SAFE instruments; Series A round defined as >$5m raised.
[5] Munoz-Boudet, A,M. 2017. “Women are Still Underrepresented in Science Maths and Engineering Here’s What we can do” World Economic Forum. (accessed here).
Jiang, L., Cheryan, S., Ziegler, S. and Montoya, A. (2016) “Why Are Some STEM Fields More Gender Balanced Than Others?”. American Psychological Association. (Accessed here)
