The imbalance in venture capital funding, specifically concerning women entrepreneurs, remains a persistent challenge year after year. While progress is being made in increasing female participation in the technology sector overall, the disparity in access to funding appears to have stalled. The proportion of venture capital allocated to companies with women founders has shown minimal change since 2012.

This issue is particularly noticeable within the financial technology (fintech) industry. Over the past decade, women-led fintech companies have secured only a small 1% of the total fintech investment. This outcome is understandable considering fintech’s roots in both finance and technology – two fields historically characterized by male dominance. However, this does not diminish the significant contributions of women in the field, and it is essential that women founders receive equitable access to venture capital.

In the immediate future, women founders can proactively improve their prospects for securing VC funding by utilizing their networks and support systems, and by cultivating the confidence needed to succeed. Looking ahead, systemic changes are required to create a more equitable environment for women entrepreneurs. Venture capital firms should explore strategies to increase the representation of women in decision-making roles at all levels of the organization.

Let's examine the current status of gender bias in venture capital investment and explore actions that founders, industry participants, and the funds themselves can take to bridge this gap.

Venture capital funding isn't equally accessible to all entrepreneurs

During 2019, companies with women leaders secured less than 3% of all venture capital investments. Furthermore, just one-fifth of all U.S. venture capital was directed towards startups that included at least one woman as part of the founding team. The typical investment amount for businesses founded by women, or co-founded by women, was less than half the amount received by startups with exclusively male founders. This situation is particularly noteworthy given that women represent a significantly larger percentage of the overall founder population than their share of received funding—approximately 28% of all founders are women. When considering the combined impact of race and ethnicity, the data reveals even more significant disparities: Black women founders have received 0.6% of all funding secured since 2009, and Latinx female founders have only seen 0.4% of the total investment capital.

These numbers reveal a troubling imbalance, and this is a challenge I have personally experienced. I have encountered venture capital investors who questioned my co-founder—while I was present—about why I was leading the conversation rather than him. In another instance, a prospective investor inquired of my co-founder about his business associates, stating a need to know who he would socialize with after work.

These examples illustrate a prevailing expectation among venture capital investors for a male presence within the founding teams of the companies they invest in, and a tendency to prioritize the perspectives of men over those of women in leadership positions—whether intentionally or unintentionally.

Therefore, what strategies can female founders employ to maximize their chances of success when seeking funding from venture capitalists?

Get funded, as a woman

Female entrepreneurs aiming to secure venture capital funding can employ several strategies to improve their prospects within what can appear to be a challenging landscape. Initially, it’s beneficial to utilize your existing network and support system, particularly mentors and role models, to facilitate introductions to prospective investors. Referrals from trusted sources can significantly increase your visibility – venture capitalists are considerably more likely to consider you seriously when you are recommended by someone they know.

Should you find your support network is not yet robust, actively participating in communities designed for female founders and startups is a valuable step toward building one. For instance, The Next Women provides a worldwide platform for women leaders driving forward-thinking businesses, and Women Tech Founders is a community-based organization dedicated to fostering connections and providing support for women working in the technology sector.

Projecting confidence is crucial during the fundraising process. It’s important to refine your abilities in sales, presenting your ideas, and negotiating. If you identify areas for improvement, consider participating in workshops or seeking mentorship to hone these skills before presenting your funding requests.

During discussions with leading male venture capitalists and executives, you might encounter situations where you perceive a difference in their responses due to your gender. In such instances, drawing upon your self-assurance and internal fortitude is paramount. They will only recognize your potential as a credible and capable founder if you demonstrate that belief in yourself.

Ultimately, women founders should acknowledge that they represent the pioneering generation of their gender in the venture capital arena – and that carries a unique and empowering aspect, despite the difficulties. Even when encountering unconscious biases, it’s essential to view the experience as a learning opportunity, as the success of future generations depends on our willingness to navigate this path rather than deferring to male co-founders.

Greater female representation in venture capital leads to increased funding for women entrepreneurs

Although individual efforts by women are valuable, systemic obstacles require adjustments within venture capital organizations themselves. A primary factor contributing to the lower levels of VC funding received by women is the limited number of women in positions of authority within VC funds.

Research conducted by the Harvard Business Review demonstrated that investors frequently base their investment choices on gender, and they pose different lines of questioning to female founders compared to male founders. Numerous accounts exist of women not receiving adequate consideration from male investors, which subsequently impacts their perceived investment potential. Consequently, funds specifically targeting women are gaining prominence as a means of addressing the imbalance in funding opportunities. It is also important to recognize that female VCs demonstrate a greater propensity to invest in companies established by women, as well as those founded by Black entrepreneurs. Beyond supporting women and minority investors, the venture capital industry should prioritize the advancement of more women into leadership roles.

Gender equality in VC makes more business sense

Since its inception, the Prometeo team has intentionally worked to ensure representation of both men and women in key decision-making positions. The inclusion of women on the founding team and within leadership roles has been essential not only for mitigating potential unconscious biases, but also for fostering a more vibrant work setting, where a variety of perspectives leads to improved business outcomes.

Pursuing gender equality, both internally within venture capital firms and among the entrepreneurs they support, demonstrably benefits a company’s financial performance. Indeed, research conducted by the Boston Consulting Group revealed that startups with women founders deliver 78% return for each dollar invested, in contrast to the 31% generated by companies founded by men.

Within Latin America, female founders secure a greater percentage of venture capital funding than in any other global region, which explains why women are spearheading the area’s advancements in financial technology. Increasing the number of women in leadership roles is, fundamentally, a sound business strategy.

Addressing the disparity in gender representation in venture capital funding presents a significant challenge, but it is a necessary one. Through internal improvements to VC practices, alongside external programs such as community development, educational resources, and support systems specifically for women, we can strive to create a more level playing field within the venture capital landscape.