More proof that it’s smart to invest in women
Bra snap to two Seattle ladyballers who informed this issue: Rebecca Lovell and Janis Machala.
First up, a new report from The Center for American Entrepreneurship (CAE) and the National Center for Women & Information Technology: The Ascent of Women-Founded Venture-Backed Startups in the United States.
The CAE is a nonpartisan research, policy, and advocacy organization. Rebecca Lovell is the Chair of the CAE’s Board of Directors, as well as the Director of Create33 entrepreneur center in Seattle.
The team behind this report analyzed PitchBook data from 2005 to 2017 and produced 13 “first financing” cohorts (defined as those companies closest to "starting up"). Then, utilizing a PitchBook algorithm, they segmented the companies into “women-founded” (at least one female founder) and “non-women-founded.”
The number of first financings by founder gender were examined over time, by industry, and across U.S. metropolitan areas.
Download the full report.
What stood out
The percentage of venture capital flowing to women-founded companies still sucks but it's trending above the often cited 2%—over the 13-year period studied, 16% of VC funding went to companies with at least one female founder
If you can get VC in the first place, there's a good chance that you'll secure another round (which tells another potentially positive story about the role investors play in the ongoing success of female founders)
When there’s at least one woman in charge, the companies perform as well as, or slightly better than dude-only companies on KPIs (e.g. follow-on financing and exits via IPO or M&A)
Women-founded startups represent a small but growing share of activity
Upside: From 2005 to 2017, venture funding of women-founded startups grew from 7% to 21%.
Downside: This growth accounts for just 16% of such activity over the 13-year period.
Women-founded startups have similar rates of follow-on financing
Upside: 52% of women-founded startups raised a second round of capital within three years of a first financing and 37% raised a third round within five years. Those same figures for non-women-founded companies were 52% and 36%.
Downside: Nada, this chart is encouraging—we’re tracking tight, and some years leading the non-women-founded cohort.
Women-founded startups have (mostly) similar rates of exit
Upside: Women-founded startups are near parity on IPOs (3.8% versus 3.9%).
Downside: Slightly lower acquisition rates (34% versus 38%).
Women-founded startups are concentrated by industry
Upside: There's good representation in nearly every industry, with higher concentration in consumer goods and services and healthcare (that tracks with our Funding reports, especially that past six months).
Downside: Software/IT has the highest representation of women-founded companies but it’s not being funded equally to the industry average (there's that stubborn tech gap, again).
Women-founded startups are concentrated by geography
Upside: We flock together in the leading startup communities of San Francisco, New York, Boston and Los Angeles; Ann Arbor and Philadelphia stand out in the second tier (strong university entrepreneurial programs).
Downside: Seattle did not make this list (nor did Silicon Valley proper), coming in slightly below average, at 15% over the whole period (2005-17) versus 16% for the whole US for first financings to women-founded startups
Thanks to Rebecca for providing Seattle data that's not in the report. WTF, Seattle?!?
Download the full report.
Greater Seattle innovation data
Janis Machala sent us the 2018 Greater Seattle Innovation Ecosystem Report, authored by Iinnovate in conjunction with the University of Washington. (Janis also consulted on the report, lending 20+ years of expertise working deep within this ecosystem.)
Now in its fourth year, this report snapshots Greater Seattle’s innovation economy and identifies the top investors, professionals, service providers, and community players that make up its ecosystem.
There is also a separate 2018 Greater Seattle Innovation Report Card and a History of the Seattle Tech Economy. The former evaluates the strengths and weakness of our region's innovation economy and lists organizations, individuals, and initiatives supporting technology, health and life sciences, government, and women in technology related fields.
All three reports available here.
What stood out
Upside: The Innovation Report is a phenomenal resource with lists of investors, advisors, accelerators, co-working spaces, professional services, meetups, etc. to save hours of research time.
Downside: Following the geographic findings from the CAE's report, there's heavy lifting to be done in the Greater Seattle area to support a well-funded female-founder community.
2018 saw the largest growth in new, local tech venture capital firms in a decade
Last year saw shrinking amounts of money invested in early stage tech deals
7 out of 10 of the top office tenants are tech companies (the report lists co-working spaces, incubators, accelerators, and real-estate brokerage firms)
Greater Seattle has strengthened as a regional and global innovation center (access an index of major cross-sector initiatives and organizations)
Our region has become a global leader in cloud computing, machine learning, and next generation e-commerce
New tech jobs in Greater Seattle over the last few years have grown at double the rate of Silicon Valley, while over 80% of the tech talent in Washington State has come from out of state
WaitWhat, $4.3 million Series A, June Cohen, Co-Founder and CEO
New York-based content company and podcast creator. Cue Ball and Burda Principal Investments led the round. Also of note: WaitWhat reserved up to $1.5 million dollars of additional funding capacity specifically for women and minority led investment funds such as Victress Capital, Human Ventures, and Able Partners.