The National Venture Capital Association (NVCA) recently published a study on the state of the U.S. venture industry over 2021 that shows an impressive increase in venture capital (VC) activity. According to the study, 14,411 venture-backed companies received a record $332.8 billion in the past year. Only 2.4% of the total went to women-founded companies.
Even if this growth is a reason for celebration among entrepreneurs, the association highlights the need for better diversity representation within the venture ecosystem. According to financial data and software company PitchBook (via CW33), only 2.4% of the total capital invested in venture-backed startups in the U.S. was destined for companies solely founded by women. Using data published by PitchBook, the angel investing platform Propel(x) created a ranking for the top 15 states with the most venture capital investments in women-founded/co-founded startups since 2018.
Propel(x) found that Texas’ VC funding for women-led startups since 2018 was over $5 billion. Earlier this year NorthOne bank ranked the Lone Star state as one of the best states for women entrepreneurs, with 1.4 million women-owned businesses. One of those is Pandata Tech, an information technology company co-founded in 2016 by Jessica Reitmeier, that received a $100,000 grant last May to participate in a National Geospatial-Intelligence Agency program to explore solutions for cybersecurity risks.
The ranking was based on the total amount of VC funding that went to startups founded by at least one woman from 2018 through July 31, 2022, per state. Unsurprisingly the leading states on the list are California, New York and Massachusetts, the three states that accounted for 84% of total U.S. VC AUM for the second consecutive year in 2021, but in the fourth place, we find Texas.
As a Harvard Business Review article published in February 2021 points out, gender equality in funding startups is of capital importance for the overall job picture for women. The article found that only 12% of decision-makers at VC firms are women (2.3% more than in 2019), and most firms are yet to add a single female partner, making this particular industry a hard-to-enter “boy’s club.”
A Kauffman Fellows study from 2020, shows that women venture capitalists are twice as likely to invest in female founding teams. According to the article startup businesses with female founders hire about 2.5 times more women, while companies with both female founders and female executives hire six times more women.
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