All-male vs. all-female founding teams; Difference in VC investment trends

For the past two years, the lack of financing available to female founders has garnered the attention of both investors and consumers alike. Pitchbook’s Q2 Venture Monitor report presents some interesting, albeit, bleak data points.

Female founders have experienced a decrease in VC deal activity and an increasing trend in later-stage investments, which is parallel with trends felt by the entire country. Unsurprisingly, the same five cities that experience the most of the VC activity are where female founders experience the most funding: Bay Area, New York, Boston, Los Angeles, and Seattle; the Bay Area and New York making up 35% (22% ; 14%) of deal count and 58% (47% ; 11%) of capital raised across the country by female founders.

What caught our attention the most was the pre-money valuations of mixed founders and all-female founder companies, which the reports refer to as “continuing to lag.” All male-founder companies YTD 2020 have a median of $33.4M, mixed-founders $20M, and all-female at $12M. There is a $21.4M difference between the median valuation of all-male founder companies and all-female founder companies (178% difference).

We see this same trend in averages by gender on pre-money valuation, all-male founders $404.9M, mixed founders $133.4M, and all-female founders $45M. This trend may be attributed to the fact that more companies in the market have all-male founders than all-female founders

However, if you look at the median behaviors, they are also very different. While the all-male founder pre-money valuation median saw a 5% increase between 2018-2019 & 59% 2019-2020, mixed founder companies have seen a similar trend with a lower growth so far this year (7% 2018-2019; 33% 2019-2020) and all-female founder companies saw a huge surge last year have mostly been stagnant this year (20% 2018-2019; 0% 2019-2020).

If we take a similar look at the pre-money valuation averages, all-male founder companies decreased 14% 2018-2019 and spiked 147% 2019-2020 so far, mixed-founder companies increased the last three years at a decreasing rate (69% 2018-2019; 38% 2019-2020), all-female companies saw no change last year and decreased this year (0% 2018-2019; -1% 2019-2020).

This begs the questions, why are valuations of mixed and all-female founded companies lower or increasing at a slower rate than men’s? Is it due to the pandemic? The data also adds clarity to why it is key to continue supporting female entrepreneurs and providing them the tools to succeed despite adversity. This is something Endeavor takes seriously and is trying to address with its EndeavorLAB program for female entrepreneurs.

 

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