Are Investors Still Skeptical of Married Co-Founders?
Evaluating the possibility of progress being made and changes in attitude
There are times when one needs to speak out against issues in order to effect meaningful change in critical areas of life. There are also times when it is probably better to highlight the positives. The latter has the benefit of raising awareness about the progress being made, while acknowledging what else needs to be done.
Back in 2017, I wrote about investors having a fear of backing married co-founders. That article came about from my own experience as a co-founder with my life partner, Chris, while we were seeking funding for Tunedly. At the time, I was not alone in my observation of venture capitalists having an unfair bias towards married co-founders; I had quoted Growth X Capital founder Will Bunker, who had also written an article on the topic.
Moreover, while I only hinted about it in my previous post, one cannot overlook the bias towards female founders by investors in general. According to Pitchbook, 2018 marked the first time that women-led startups received 20% of VC funding, compared to startups headed by men. Before that, the numbers for women lagged at 10% and under.
I could carry on highlighting the skewed narrative for startup funding, such as the fact that only 12% of venture capitalists are run by women. However, two years on, I have decided to re-visit the topic — not to rehash the discussion but to highlight some of the positive steps being made in the area of startup funding.
First of all, external funding is vital to the survival and ultimate success of many startups. Most entrepreneurs simply don’t have the capital needed to develop new products, purchase new equipment, or expand operations. On the other hand, savvy investors are always on the lookout for startups and companies that have promising products and services that could bring a decent ROI. The demand has seen steady growth in the number of incubators and programs aimed at supporting new startups across various industries, from fin-tech to agro-processing.
But has anything changed?
While I haven’t found research suggesting that investors are more likely to invest in married / couple co-founders, the numbers suggest a gradual shift towards providing funding for women and minority groups. As was mentioned earlier, women-led companies accounted for 20% of businesses that were backed by VCs in 2018. In dollar figures, that represents capital funding of $46.3 billion. That was more than twice the $22 billion raised by female founders in 2017 and a great leap from the $3 billion received by the same cohort back in 2010. For 2019, the forecast is for an even higher amount of female founded companies to receive support from investors.
Some VCs have even set up specific funds to address the disparity. Anu Duggal, a New York based entrepreneur turned venture capitalist is one such example. Having started the Female Founders Fund in 2014, her activities in the space has helped to push platforms such as Thrive Global and Maven, which are led by women, to success in their respective markets. In a recent interview, she pointed out that in 2019 alone, 18 women-led startups in New York were able to raise Series A funding compared to just one such company in 2013.
The changes have also been reflected at the top level. Leadership in many of the large VCs has become more diversified and there is a greater level of inclusion in recent years. For example, despite a still too-high figure of 88% of VCs being led by men, many of the larger funds are having their first and second female partners on their boards. It is not hard to see how such a move can help change the narrative going forward for women founders.
Changes in attitude towards married co-founders
As it relates specifically to married and couple co-founders, this group keeps showing resilience and excellence. Most recently, married couple Amy Pressman and Borge Hald saw their co-founded company Medallia (a customer experience platform) record better than expected share prices when it debuted as a public company in July 2019.
Couples owning and operating businesses together seems to be a phenomenon that is here to stay. Figures from the 2016 U.S. Census Bureau survey of entrepreneurs showed that approximately 11 out of every 100 U.S. companies were owned and operated equally by couples. And with companies such as Fertility IQ, Brooklinen, and Pique Tea, Inc. coming to the fore, that trend seems likely to increase.
In addition, there is some indication that attitudes toward this group may be changing. One California-based VC firm, Uncork, has in recent years invested in several companies led by couples or with family ties (including Eventbrite, which successfully went public in 2018).
In conclusion
As a female founder, whether married or single, it would seem the chances of finding suitable investors were/are pretty slim when compared to male-founded startups. However, things are changing for the better. And while there is plenty more that needs to change to level the playing field, I am happy with the progress made so far. I think it’s a great time to be alive for married and couple co-founders.
