Friday Letter: The number of female founders is a bellwether for VC

Funding for start-ups founded by women is surging in 2021. That's due in large measure to the growth of female investors and GPs.

I recently interviewed Lotti Siniscalco, the newest partner and only female partner at Emergence Capital.

Among the things we discussed that I didn’t incorporate into the story I wrote is about the number of female investors in venture as it relates to backing female founders. Siniscalco noted that 2020 was a tough year for female founders across all industries. “We lost a lot of progress that was made over the past 10 years,” she said, as she surmised that the pandemic and the new work-from-home status upended everyone’s life at home. A lot of the responsibilities at home thus fell back on women.

This notion was confirmed last week by a PitchBook report on Women in VC. The report said the pandemic disproportionately impacted female founders last year as companies founded solely by women experienced a 28 percent decline while all-male-founded companies only saw a 5 percent decline between March and June of that year.

But 2021 is another story. US-based female-founded companies raised $40.4 billion across 2,661 deals through the first three quarters of this year, which already surpasses the previous annual deal value record of $23.7 billion in 2019. A decade ago, only $3.6 billion was invested in all female-founded start-ups, according to PitchBook.

The question is why the surge? Maybe the easing of WFH rules has something to do with it. I’m no Pollyanna, but I’d argue that progress is being made when it comes to diversity in the venture ranks. Let me point to Siniscalco and the rise of female partners like her, as well as, anecdotally, more female GPs and venture firms with founding women.

Our own site here at Venture Capital Journal is replete with examples, just from this week alone. In addition to Siniscalco’s promotion to partner, take a look at these news items below. Do you see a trend?

  • Claire Chang, a solo GP and founder of igniteXL Ventures, a beauty and wellness-focused venture firm based in Palo Alto, California, launched its debut fund with $10 million in funding. LPs include Han Kim of Altos Ventures Management, Perry Ha of Draper Athena, Allen Miner of SunBridge Group, CTK USA Holdings and South Korean cosmetics giant Cosmax.
  • As a follow-up to our inaugural coverage of 60 Women of Influence in Private Markets, my colleague Louise Fordham recently interviewed some of them about tech trends they’re seeing.
  • Red Bike Capital, a seed-stage fund based in New York and led by founder and Latina Rachel ten Brink filed a regulatory document for its first fund.
  • Rethink Capital Partners, which invests in women-led companies, has added two new team members: Amy Nelson as chief strategy officer and Alison Smith as partner, focused on growth.

Let me know what you think. You can hit me up at agoldfisher@buyoutsinsider.com.