Pandemic’s impact disproportionately reduced VC funding for female founders

The last few quarters did not play out as as expected for venture capitalists or entrepreneurs; instead of a pandemic-fueled recession that cauterized the flow of private investment into startups, the economic shifts brought on by COVID-19 have given many companies a tailwind.

Venture capitalists ramped up their spend in Q2 and Q3, pushing private investment totals higher as software demand shot up as work went remote, e-commerce boomed and schools shuttered.


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The startup rebound is omnipresent around Silicon Valley: startups are raising fresh capital amidst a pandemic — and then raising again (and again). Even startups directly impacted by COVID-19 are seeing green shoots, while local entrepreneurial scenes are growing as investors learn to write checks over Zoom.

But, while that’s a fortuitous narrative, it’s not the full story. Data from a variety of sources collated by TechCrunch shows that early-stage female founders have been disproportionately hurt by the pandemic’s impact.

The Exchange touched on this topic a few weeks ago, noting that “number of rounds raised by female-founded and co-founded companies fell year-over-year, with dollars invested in those rounds collapsing to 2017-era levels.” Other data indicated that the pandemic was landing more heavily on the shoulders of women than men, causing them to delay entrepreneurial plans.

This morning, The Exchange is fleshing out its understanding of the changing VC market for female founders, leaning on information collected by the FLIK Female Founders Report, PitchBook, January Ventures and a report from Balloon on the changes in the venture and startups three years after the #MeToo hashtag spurred a global conversation about representation.

A VC rebound

The pandemic’s bite was felt in the second quarter when, if one subtracted the capital raised by Reliance Jio, VC investments fell by 9% compared to Q1 2020, and 23% compared to the year-ago second quarter.

In the third quarter, things turned around. North American startups raised $37 billion and Asian startups raised $24 billion, while European startups raised $9 billion. As The Exchange reported, “Asia’s result was its best since at least Q4 2018, as far back as our dataset goes. Europe’s total tied its high-water mark set in Q2 2019,” adding that “as a combined pair, venture capital outside North America might have just had its best quarter in years, if not ever.”

From fear in late Q1, to a middling Q2, to a boom in Q3. It was an impressive comeback. For some.

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