CAE Releases New Report: “The Ascent of Women-Founded Venture-Backed Startups in the United States”

February 19, 2019

For Immediate Release
5 minutes

Washington D.C. – The Center for American Entrepreneurship (CAE), a nonpartisan research, policy, and advocacy organization, and the National Center for Women & Information Technology (NCWIT), today released a new analysis by Research Director Ian Hathaway: “The Ascent of Women-Founded Venture-Backed Startups in the United States.”

The U.S. venture capital industry, and the high-tech startups supported by it, have a well-known gender gap.  In 2017, 16 percent of the nearly $83 billion invested in U.S. venture-backed startups went to companies with at least one female founder, and just 2.5 percent went to startups with all-female founders.  Meanwhile, an estimated 9 percent of general partners (the people making investment decisions) at leading U.S. venture capital firms are women.

The report adds to the relatively limited research in this area by studying patterns of women-founded, venture-backed startups in the United States between 2005 and 2017.  While others have tended to look at topline aggregates of venture deals and funding amounts by the gender composition of founding teams, CAE’s report focuses on the number of new companies entering the venture-backed pipeline each year by tracking “first financings” (initial venture investments).

The analysis reveals several key findings:

First, women-founded companies represented a small share of venture capital first financings between 2005 and 2017, accounting for just 16 percent of such activity.  However, they also showed remarkable improvement over time, expanding the share of total activity accounted for by women-founded companies in all but one year over the period examined.

Second, once funded, women-founded startups perform at least as well as startups with no women founders on several measures, including the percentage raising a second or third round of capital in three or five years, or reaching an IPO within ten years of first financing.  Women-founded startups are slightly less likely to be acquired than are non-women-founded companies, which makes the overall rates of women-founded exits lower.

Third, women-founded companies exist in nearly every industry in our venture capital database, but are concentrated (relative to startups overall) in areas of consumer goods and services and in healthcare.  The software industry produces the largest number of women-founded startups, accounting for 40 percent of women-founded companies.

Finally, women-founded companies are concentrated geographically in America’s leading startup communities, including in San Francisco, New York, Boston, and Los Angeles, which are both large and gender diverse.  The San Jose metro (the heart of Silicon Valley) is the lone exception among the leaders, where the women-founded share is well below average.  Additional cities with persistently high rates of women-founded startups include Ann Arbor, Memphis, Philadelphia, Pittsburgh, Boulder, and Washington, D.C, among others.

“These findings, considered jointly with other research, suggest a need for greater representation of women-founded companies in venture funding markets – or more to the point, for investors to more adequately capitalize these high-potential entrepreneurs,” said Hathaway.  “As the data show, the percentage of women-founded startups that reach key performance milestones (follow-on financings, IPOs) is similar to non-women-founded firms.”

“This work also points to areas of further inquiry for researchers,” Hathaway continued, “in particular, the need to better understand the nuanced dynamics that account for the relatively few women-founded venture-backed startups.  While some may argue that this is a simple matter of choice – that women disproportionately choose not to participate in the venture economy – a body of research related to gender and occupations suggests that such an interpretation is too simplistic.  Other important questions include why acquisition rates of women-founded startups are lower than for non-women-founded firms, why women-founded companies are so heavily concentrated in a few industry sectors and so underrepresented in others, and what can be learned from the geographic dispersion of women-founded venture-backed startups.”

In a foreword to the report, Rebecca Lovell, Director of Create33 in Seattle, WA, and chair of CAE’s board of directors, writes: “Women in venture capital are still underrepresented, as are VC-backed women-founded startups.  Our study breaks this down in detail, but what differentiates it and why I’m thrilled to be a part of the Center of American Entrepreneurship is that (1) our research entails detailed analysis of 13 years of data, and (2) it demonstrates that ventures founded by at least one woman perform as well as or even slightly better than their all-male counterparts on a number of measures.  While life experience and intuition have long suggested that investing in women is the right thing to do, here we present data to demonstrate it’s also the smart thing to do.”

In her own foreword to the report, Lucy Sanders, co-founder and chief executive officer of NCWIT, writes: “Technology innovation is a creative process; multiple people work on a single product or service, from company startup and front-end requirements generation, through design and development, to product rollout and support.  It matters who sits at the design table and in the boardroom working on these innovative efforts.  Just as in the creation of great art, inspirational music, or a fine meal, technology creation benefits from diverse life experiences.  The Center for American Entrepreneurship commissioned this effort because of our belief that inclusive leaders are informed leaders.  That’s why, after reading this report, we encourage you to share it with a colleague.”

Full Report

The full report can be found at  CAE welcomes press, bloggers, policymakers, scholars, think tanks, and other interested parties to use and reference our report with attribution as: “Source: The Ascent of Women-Founded Venture-Backed Startups in the United States,” Ian Hathaway, Center for American Entrepreneurship, February 2019.”

About the Center for American Entrepreneurship (CAE)

The Center for American Entrepreneurship (CAE) is a nonpartisan, Washington, DC area-based 501(c)(3) research, policy, and advocacy organization.  CAE’s mission is to engage policymakers in Washington, and at state and local levels across the nation, regarding the critical importance of entrepreneurs and startups to innovation, economic growth, and job creation – and to pursue a comprehensive policy agenda intended to significantly enhance the circumstances for new business formation, survival, and growth.

For more information, visit

Follow CAE on Twitter: @startupsUSAorg

About the National Center for Women & Information Technology (NCWIT)

The National Center for Women & Information Technology (NCWIT) is a non-profit community of nearly 1,100 universities, companies, non-profits, and government organizations nationwide working to increase girls’ and women’s meaningful participation in computing.  NCWIT equips change leaders with resources for taking action in recruiting, retaining, and advancing women from K–12 and higher education through industry and entrepreneurial careers.

For more information, visit

Follow NCWIT on Twitter: @NCWIT

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