VC Funds Helping Female Founders Build Winning Teams in 2022

83% of UK VC deals have no women in the founding teams.


There’s also a widening funding gap between male-founded and female-founded companies. Just 2.3% of VC funding went to women-led startups in 2020. This has fallen to 1.7% in 2022.



This is despite the fact companies with female founders perform 63% better than those of their male peers.


In Europe, this gap is just as severe. The share of investments involving female founding teams has barely moved in recent years.


In 2020, female-founded companies represented less than 2% of the total capital invested in venture-backed startups.


Some speculate the pandemic made investors more wary of risks. Even when stepping outside their “boys’ club” networks, many investors may be sticking with “pattern-matching habits”. In other words, they may be investing in the same kinds of companies they’ve supported in the past.


These are often tech companies led by men.


This is true of the crypto world, where less than 5% of entrepreneurs are women.



A New Wave


Following International Women’s Day, however, there’s positive news in the VC world.


Funding for female-founded US companies rose to record levels in 2021. It reached $40.4 billion in the first three quarters of the year, far surpassing $23.7 billion in 2019. Investors profited too, with female-founded firms recording $59 billion in exits.


There’s also a new wave of investors focusing on female founders.


Among them is London-based Pink Salt Ventures (PSV): the first fund in the UK dedicated to female entrepreneurs. The micro VC, started in 2019 by Samira Ann Qassim, is preparing to launch its second fund this spring.


The new fund plans to invest in 12 female-led companies. It’s prepared to write cheques of £350k for a 5-15% stake in each business, depending on whether it leads or not.


For Qassim, backing women isn’t just a moral calling.


“I started PSV not because of the funding gap, but because I was looking at these different macro trends of innovation... I decided to invest in female founders because they’d be building in these kinds of areas.
“The intention was always to look for outsized returns. That’s what you’re doing as an investor.”

One obstacle for these funds is that they can’t count the British Business Bank as a limited partner (i.e. a third-party investor in a private equity fund). That’s because the bank doesn’t make investments that “discriminate” based on gender or ethnicity.


However, there are positive signs for female-funds.


Auxxo, Germany’s first venture fund focused on women, launched in November 2021. More are in the works too, with the likes of Sie Ventures — a capital platform for female entrepreneurs.



Female-First Funds


If you’re a female founder looking for funding, it’s worth familiarising yourself with firms and investors that focus on women entrepreneurs.


Other funds that are female-first and active in Europe include:


Merian Ventures — US/UK firm focused on women in deeptech.


“I want to make it easier for women and minorities with STEM aspirations to create companies...”

- Alexsis de Raadt St James, Managing Partner at Merian Ventures


January Ventures — US firm focused on women but also active in the UK.


“We back founders based on their tenacity and ambition, not their pedigrees or who they know.”

- Jennifer Keiser Neundorfer, Co-Founder at January Ventures


Unconventional Ventures — Nordic early-stage firm focused on women and minorities.


“... Unconventional is often what the world needs in order to change.”

- Nora Bavey & Thea Messel, General Partners at Unconventional Ventures


The Better Fund — Upcoming Eastern European tech fund, currently in the process of raising €30m. It will be focused on early-stage, ESG-first startups with female founders or gender-balanced teams.


“We want to solve the gender pay gap and social equity in Europe.”

- Liina Laas, Founding Partner at The Better Fund


Forerunner Ventures — US firm for women but has invested in the UK’s Thingtesting and Finland’s Oura.


“We’re a diverse team of visionaries and veterans who looked at the VC industry and said: ‘We can do more.’”

- Jason Bornstein, Principal Partner at Forerunner Ventures


Female Founders Fund — New York-based firm but has invested in the UK’s Peanut and Switzerland’s Fave.


“In 2014, we created Female Founders Fund with one simple belief: women will build the companies of tomorrow.”

- Anu Duggal, Founding Partner at Female Founders Fund



Tips for Female Founders Looking for Next-Stage Funding


#1: Prepare a Plan of Action


Although the fundraising process changes from stage to stage, having a plan is crucial.


Across all stages, it’s important to plan when you want to start fundraising and which VCs you want to engage with. It helps if this plan includes an ongoing process of building relationships and crafting your story, even when you’re not actively fundraising.


#2: Leverage Your Current Investors


If you’ve been able to secure investment already, consider your existing investors and board members.


Founders who’ve done their research and identified VCs that might be a great partner for the next stage of growth don’t always engage with the partners they already have. Your existing investors can be a great bridge to other investors, especially U.S. investors.


Consider doing a practice round with your existing investors. This can help identify questions investors might have and increase your confidence in responses.


#3: Craft a Pitch Appropriate to Your Stage


Top tier VCs look for the same thing: exceptional founders building scalable businesses with products that customers love.


It’s important to understand if the VC you’re considering invests at your stage. You also want to understand if they’re excited about your sector. That said, it’s important to recognise that investors focus on different areas depending on the stage:


Pre-Seed / Seed: The team, market and product vision matter a lot. There aren’t that many data points for a VC to look at, so you will need to emphasise why your business needs to be built and why you’re the right person / team to do it.


Series A: Demonstrating product-market-fit is key. Share initial data points around commercialisation and what initial customers say about the product.


Series B, C and further into the growth stage: Financial metrics and traction to date is even more important. It’s key to emphasise scalability of the product and your engine for efficient growth.



Summary


Despite the challenges, there are funds actively looking to invest in female-founder startups. It’s an exciting time to be a female entrepreneur and building the team of your dreams is possible with the right support.


Are you looking for help growing your team - not just with capital? We can help. At HVO Search, we work with Founders and CEOs across beauty, luxury, fashion, and wellness, and understand what (and who) it takes to elevate their businesses.


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