Women and VC: Despite some progress, women-founded and -led companies hit harder by 2020 pandemic

While venture capital (VC) deal activity by women-(co)founded and women-led companies has increased over the last 15 years by some metrics, a new report indicates that the 2020 pandemic and global recession impacted these companies more than companies founded and led by men. In the second edition of its annual All In Report, PitchBook expands on its efforts to shed light on the dynamics of women’s participation in the VC market. While participation in the VC market was impacted for companies founded and led by men and women in 2020, the report highlights the impact on women-founded and -led companies by showing recent declines in nearly every measure used in the report compared to nearly constant pre-pandemic trends in increased deal count, deal value, company valuation, and exit rates by women-founded and -led companies.

VC activity by women-founded companies reached benchmark highs in 2019 in terms of the number of deals (more than 2,500); the dollar value of deals (nearly $20 billion); the median early-stage valuation ($27 million); median late-stage valuation ($62.5 million); and exit count (nearly 200). Other metrics, such as the median time to exit and the value of exits, show more fluctuation over time — including drops in 2019  — while still maintaining a general upward trajectory.

However, the shares of VC deals and dollars have remained more stagnant over the last 15 years for companies founded by women only. In 2019, companies founded by women only accounted for only 6.3 percent of the deals in that year while those co-founded by both men and women accounted for 18 percent. Similarly, the share of VC dollars going to companies founded by women only was just 2.7 percent in 2019 compared to 13.9 percent for companies cofounded by women and men.

The report finds that while VC activity in 2020 was negatively impacted by the pandemic, women entrepreneurs were impacted disproportionately compared to their male counterparts — particularly in the areas of deal activity and company valuations. Along almost every measure used in the report, the authors find that 2020 saw greater decreases for women-founded and -led companies than for companies with male founders and leaders.

In an effort to begin illuminating the underlying causes for this, the report supplements its deal and valuation data with survey results from the Female Founders Alliance, finding that a majority of women founders had delayed their plans to start a company in response to the pandemic. The report references an increasing body of anecdotal evidence for and early studies on the outsized impacts of the pandemic on women, but also recognizes that the usefulness of its data is limited in this regard.

Yet, given the slow, incremental progress women entrepreneurs have made over the last 15 years, the report concludes that there is no reason to expect this upward trajectory not to resume and continue after the pandemic has ended.