Global Venture Funding Going To Female Founders Skyrockets, But There’s A Catch

Today we are going to take a look at venture and seed global investment trends in female-founded startups over the last five quarters. Our analysis includes 9,805 venture and corporate deals and 7,930 seed deals for companies with founders associated.

In the second quarter of 2018, 35 percent ($20.7 billion) of reported venture funding went to companies with female founders. This is an unprecedented increase of 22 percent, up from a 13 percent average for the past four quarters.

However, the percentage point increase is mostly due to a single $14 billion Series C round raised by Ant Financial—the largest-ever venture funding round to date. As it happens, Ant Financial was run by its sole female founder, Peng Lei (Lucy Peng), who co-founded Alibaba with Jack Ma.

Complicating this funding round, though, is Peng’s departure from Ant Financial to become CEO of an Alibaba-owned ecommerce startup called Lazada. She assumed the CEO role in March, three months before Ant Financial announced its raise. Regardless of the departure, Peng is still Ant Financial’s founder, justifying the round’s inclusion in the data.

Asia-based companies are driving this late-stage funding in female founders. However, outside of this most recent quarter, Asia-based companies reflect the same trend. On average, 13 percent of venture dollars invested over the previous four quarters went toward female-founded companies.

Within the last five quarters, there have been ten venture or corporate rounds over $1 billion and a further 29 rounds of $500 million or more. Of the ten largest rounds, nine are from Asia-based companies and one is from the United States. Only two of the companies have at least one female founder, including Ant Financial and Singapore-based Grab.

In contrast, percent deal volume for companies with at least one female founder has been lowest in the last two quarters at 14 percent. Previous quarters came in between 15 and 16 percent.

Deals Of Note

Of all the deals that included female founders in Q2 2018,  the handful that caught our eye are late-stage, Asia-based rounds, including:

• Ant Financial, an online payment service based in Hangzhou, China, raised a $14 billion C round at a valuation of $150 billion, more than twice its last valuation. Singapore’s sovereign wealth fund GIC, Temasek, and US PE firm Warburg Pincus led the round. Peng Lei founded the company in 2014.
• Grab, a ride hailing platform based in Singapore, raised a $1 billion round from Toyota valuing the company at over $10 billion. The company was co-founded by Anthony Tan and Tan Hooi Ling.
• Hellobike, a smart-sharing bike platform for short rides base in Shanghai, China, raised $1 billion in this quarter alone from Fosun Group and Ant Financial. The company is co-founded by Yang Lei, Han Mei, and Jiang Wei.

So which firms are investing in companies with female founders?

Leading Venture Investors In Female Founders

Investors that represented the highest deal count in startups with at least one female founder include Lux Capital, GGV Capital and New Enterprise Associates—tying at four each in Q2 2018.

Based on feedback, we have also included the deal count percent of companies with female founders for the quarter. The highest percent is Union Square Ventures with three deals. representing 75 percent of their publicly-disclosed investments this past quarter.

Next we will look at seed trends for first funding into female founders. Seed percents have tended to be higher than venture percents; however, the gap between the two is narrowing.

Seed Investments In Female Founders

Seed-funded companies with at least one female founder raised $195 million in Q2 2018. This represented 16 percent of all seed dollar volume for the quarter, matching 16 percent in Q1 2018, and down from 19 percent in Q2 2017.

Seed deal volume has averaged 20 percent over the previous four quarters. Q2 2018 has followed the same pattern.¹

Leading seed-stage investors in companies with at least one female founder include Startup Chile with 15 investments and Quake Capital Partners with seven. SOSV, PeaceTech Accelerator, Startup Health, and Plug & Play Ventures also made the list with five investments each. Notably, 70 percent of Quake Capital Partners and SOSV’s seed-stage deals have at least one female founder.

Taking a step back, in 2010, $2.6 billion (8.7 percent of invested dollars) was invested in companies with at least one female founder. In 2017, $18 billion (13.6 percent of invested dollars) went to this same cohort. At this rate, it would take around ten years to get to 25 percent of fundings allocated to at least one female founder. If the most recent quarter were not an anomaly, we would be within a few years of this target.

1. A larger percent of seed deals and dollar volume are added after the end of a quarter. We fully expect these absolute numbers to go up even if percents between female and male founders stay the same.

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