Women Led Startups’ Contribution To Total Startup Funding Plummets To 5% In 2023

Women Led Startups’ Contribution To Total Startup Funding Plummets To 5% In 2023

SUMMARY

According to Inc42’s Indian Tech Startup Funding 2023 Report, women-led startups raised $480 Mn+ in 2023, compared to $2.4 Bn in 2022

Women-led startups accounted for 5% of the $10 Bn total funding raised in 2023

Excluding 2021 and 2022 as outlier years, women-led seed stage startups raised $56.6 Mn across 65 deals in 2023, compared to $26.6 Mn across 60 deals in 2020

When an unprecedented funding winter freezes a vibrant ecosystem, do all startups suffer equally? For Indian startups, 2023 had been a challenging year as overall funding hit a seven-year low, tumbling to the levels of 2017. As capital dried up across sectors and genres irrespective of funding stages, many women-led startups failed to attract venture capital despite the big strides made towards gender inclusivity.When it comes to sectors, women-led startups in the ecommerce space saw the highest number of deals (42) in 2023, followed by enterprise tech (18) and edtech (12). However, enterprise tech took the lead in deal volume and raised $157 Mn, followed by ecommerce ($114 Mn) and fintech ($52 Mn) as per Inc42 report.Why doesn’t the funding community foster a gender-neutral approach during early stage funding or stick to a much-needed gender-lens investing? A key reason could be the parameters investors tend to prioritise when supporting new ventures on the block. “In my interactions with female founders, they often discuss the bias that cuts sharp through the boardroom when it comes to questioning decisions, thereby forcing women leaders to defer decisions to male cofounders,” said Garima Mitra, cofounder of Treelife that provides legal and financial assistance to startups.According to industry insiders, it is high time that investors and entrepreneurs shed the burden of gender stereotypes and work towards bridging the gap.Pearl Agarwal, the founder and managing director of Eximius Ventures, noted that out of the 100 pitches the pre-seed VC fund receives, 85% come from startups led by men. It means, despite the concerted efforts of many VCs, communities and support groups, the systemic biases against women in startups continue to exist, resulting in scant participation and a persistent imbalance in the funding ratio even in later stages when performances matter most instead of perception.

India is not the lone sufferer. Globally, too, female founders lacked the much-needed financial backing from investors due to gender-based stereotypes and a limited number of iconic role models. According to PitchBook-NVCA Venture Monitor, U.S. startups with at least one female founder bagged 26.1% of the VC pot in 2023, while all-women founding teams secured less than 2% (1.8%, to be precise) of the total deal value in the same year. Even in 2021, a year flush with VC money, female-led startups in the EU barely raised 2% of the funding, per a Reuters report.      

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