Lack Of Capital Has A Long-Lasting Impact On Success Of Female Founders

Being a female founder in tech, I get asked all the time: “How do we get more female founders in tech?”. While there is no one magic solution to the problem, I do believe that access to capital is one of the biggest obstacles.

Access to capital in the context of female founders in tech has to be looked at from a “waterfall” metaphor. Meaning that challenges and obstacles flow downwards and compound over time.

We have tons of research showing that female founders spend more time raising capital, raise less money and consistently face more conscious and unconscious biases from investors.

In addition, when evaluating startups investors tend to judge female founders based on a prevention vs. potential framework. One could even say that as a female founder you’re usually asked Seed-stage questions at Angel stage, Series A questions at Seed stage etc.

What this does is create an uneven playing field for female founders from the very beginning. Let’s say you have a female-led startup that is raising its first early investment. A female founder spends more of her time on the fundraising while still ending up with fewer investments, than her male counterparts. Fewer and smaller investments = shorter runway.

So now she needs to compromise — either on growth (which can limit her options when raising the next round), or on the product/team (because she doesn’t have enough $ to cover all), or go on to raise a bridge round so she can hit her goals (again, more time spent on fundraising vs. her company; more dilution, worse position for the next round).

This only gets worse with each round. The further you go, the fewer female founders you see. No, it’s not because women don’t have entrepreneurship talent or interest. It’s often because a lot of those startups die in the early stages without being given a fair chance.

And that’s without going into the emotional toll it takes to constantly be underestimated, underfunded and compromising. The constant feeling of doing everything right but not reaching the expected outcome. Running a startup is hard and emotionally draining for anyone, now try doing that when you’re limited and tied up by unnecessary hurdles and obstacles.

While community initiatives, highlighting female role models, mentorship, and other activities are certainly helpful, I strongly believe that accessing early capital is what will move the needle in the most meaningful way.

Talent is evenly distributed across gender, sexuality, ethnicity, class, geography. What is not evenly distributed is opportunities and access.