Reflections on austerity and inequity
As 2022 grows smaller in the rearview mirror, I’m having trouble leaving one particular statistic behind.
LAST YEAR, ONLY 1.9% OF ALL VENTURE FUNDING WENT TO WOMEN-FOUNDED STARTUPS.
That’s in all caps because, yes, I’m screaming it. Now, that paltry number is down from the measly 2.4% of the previous year. It went from really bleak to really, really bleak. When you broaden out to include female-founded companies with a male co-founder, the number ekes up to 17.2%, also down from the previous year.
Digging deeper, the root cause of the 2022 downturn is unsettling, though not surprising:
- Economic growth slowed in 2022.
- Funders got more risk-averse.
- FUNDERS SEE WOMEN AS A RISK.
Yep, screaming again. Despite gobs of evidence to the contrary, when seeking to reduce risk, (primarily male) funders stay in their familiar, comfortable (primarily male) lanes. Status quo = Status bro.
But I don’t feel biased.
This is a gleaming example of how insidious implicit and systemic biases are. Talk to your friendly neighborhood venture capitalist or read their company’s mission statement, and you’ll find no policy on sticking with the dudes when times are tough. Toggle to their DEI statements, and you’ll see they feel the opposite.
When we get scared, we stick with what we know.
As humans—especially in times of crisis—we feel one way and act another, sometimes against our own self-interests. Never mind that women-led teams generate 35% more ROI. Never mind the company’s ambitious DEI goals. When we get scared, we stick with what we know.
The wind of austerity blows the money tree toward the patriarchy.
That certainly does blow.
It will change. Or it won’t.
Regardless of the funding imbalance, female-founded companies continue to outdance their male counterparts (backward and in high heels, no less). So either traditional funders will wise up and start backing winners, or we’ll keep winning without their help. It’s your move, venture capitalists.
In spite of (or perhaps, because of) the lack of VC support, women-founded companies have outperformed the fellas in crowdfunding, microloans and good old-fashioned hustle.
That’s the type of unsustainable homogeny that will kill an industry.
More than any other industry (with the possible exception of Tom Selleck impersonators), venture capitalists are white and male. Fewer than 5% of partners in VC firms are female. Of every VC dollar in the market, 93 cents are managed by white men. That’s the type of unsustainable homogeny that will kill an industry.
The gender equity train will continue to chug on down the track. Funders will need to hop on or get out of the way.
Don’t just stand there. Bust a bias.
Biases are like navels. We’ve all got them, and it would serve us all to spend some time contemplating them. The fine folks at the Moxie Exchange have quantified the negative business impact of unconscious bias and developed tools to help identify and bust those biases. Check ’em out (and ask your VC peeps to do the same).
Sisters are doing it for themselves, thank you very much. That being said, it never hurts to seek out, patronize and celebrate women-founded companies. Here are a few of our faves:
- re3D produces affordable, human-scale 3D printers.
- Prieto Battery is building a 3D lithium-ion battery with the power to change the world.
- TUSHY keeps backsides clean while saving water and providing community toilets in India.
- Cake helps people navigate mortality meaningfully and ethically.
Dig deeper into investment in women-owned companies at TechCrunch and PitchBook.