Women in VC

Gresham House Ventures hosted its second annual women in venture capital event last week, which provided a moment of reflection on how gender disparity in VC funding has evolved over the last year.

So, what’s been happening?

We’ve had a few controversies:

Europe birthed its first femtech unicorn (1) Flo Health, albeit founded by an all-male team. However, at least this re-infused the debate on gender disparity in VC funding.
We saw the power of the women in VC community when Innovate UK was forced to reverse its decision and fund the full £4mn originally promised to female founders (2).
Similarly, earlier this year the UK government reversed its decision to raise the angel investor earnings threshold from £100k to £170k, which would have disproportionately impacted women and ethnic minority groups who heavily rely on this funding source (3).

Further, the statistics remain pretty damning:

Only 2% of VC money goes to all-female founded companies (4). A statistic that has been pretty stagnant over the past years
Women are not only less likely to receive funding but when they do raise, they tend to receive significantly less capital than men, in fact a recent report suggested wholly male-owned companies raised on average 5.9x more than their female counterparts (5).

All of this persists despite the well-documented economic benefits of funding female entrepreneurs. The Rose Review last year estimated that up to £250 billion could be added to the UK economy if women started and scaled new businesses at the same rate as men (6). It’s also been well-documented that startups with at least one female founder tend to outperform those with all-male teams (7).

However, there are signs of progress.

A recent Pitchbook report indicated that startups with at least one female founder secured a greater proportion of funding by deal value and deal volume in 2023 versus prior year – they represented 20.5% of the total deal value generated by startups (5.2% more than the year before) and 25.8% of the total deal count (8).

I’m pleased to say that Gresham House Ventures does considerably better than these benchmarks, with c.9% of our unquoted portfolio companies having a female founder. Further, through our talent function, we are involved in several senior level appointments across our portfolios with an impressive c.40% of hires made over the last year being female.

But there’s much more to do.

We recognise this and as well have having diversity within the investment team, on our investment committee and on our VCT boards, we are also signatories to the VCTA Diversity & Inclusion charter and last year became signatories to the British Business Bank’s Investing in Women Code, an initiative that collects data to better understand where and why female-led business are falling out of the investment funnel so we can learn what to do differently. It’s also why we host events like the Women in VC evening to better support the ecosystem.

At this event, we heard from one of our portfolios, Co-Founder and Chief Revenue Officer of MPB, Kat Mitchell, who shared her experience of scaling from a tiny office in Brighton to a multi-national marketplace with sites across Europe and the US, over several funding rounds. She shared several insightful tips, but the key lessons I took away were:

Build relationships with investors early and be mindful of how much you share with them as they will hold you to these projections!
Don’t be afraid to overfund. This particularly resonated as I often see female-led companies asking for a fraction of what their male counterparts demand – a critical mistake when you consider the importance of cash runway to deliver the milestones required for the subsequent funding rounds.
The first funding round is one of the most important – these investors are likely to be with you for the longest and the terms set the precedent for future rounds.
“Walk through every open door.” The VC world is generally a supportive and close-knit ecosystem – take advantage of webinars, panels and events to build exposure and your investor network. Even if an investor says “no” you’ll still learn something and they may mean “not yet”, leaving a path for conversations in a future round.
Take advantage of non-executives as they can often provide fractional support until you make a permanent hire, and you can leverage their experience to avoid making similar mistakes.
Exit isn’t necessarily a singular event. Different people jump off the bus at different times along the journey.

In summary, the gender gap in VC funding remains significant but slow progress is happening and the momentum for change is building.