Biggest Drop in Venture Funding in a Decade for Female Founders in LA
Francesca Billington is a dot.LA editorial intern. She's previously reported for KCRW, the Santa Monica Daily Press and local publications in New Jersey. Before joining dot.LA, she was a communications fellow at an environmental science research center in Sri Lanka. She graduated from Princeton in 2019 with a degree in anthropology.
The pandemic has paused a substantial amount of venture activity for women entrepreneurs in Los Angeles. This year is on track to record the sharpest drop in investment in female-led startups in nearly a decade.
Female-founded companies in L.A. closed 2019 with 234 deals worth $1.4 billion. As of September 30, there have been 141 deals and $900 million invested, according to a report from Pitchbook released this week.
VC deal activity for female-founded companies from 2006 through 2020.
The figures, though not complete for the year, show the pandemic is disproportionately hurting female entrepreneurs, eroding strides made in recent years. Across the economy, the pandemic has hit women harder.
In November there were 2.5 million fewer women in the workforce compared to the same time last year, according to U.S. Bureau of Labor Statistics. And economists worry the inequity caused by the pandemic could have long-term impacts.
This setback comes after years of progress for women-owned startups. Last year, investments in female-founded companies hit over $20 billion — 10 times the amount of a decade ago.
Female-founded companies as a proportion of all VC deal activity from. 2006 through 2020
The report did not take into account race, but Los Angeles is notable as a popular city for Latina and Black women founders to begin startups along with New York and San Francisco, according to a survey by digitalundivided, a nonprofit that tracks female entrepreneurs of color across the country. These entrepreneurs tend to have a harder time accessing capital.
Beatriz Acevedo, the co-founder of a new fintech company for Latino youth, was one entrepreneur on the hunt for funding mid-pandemic. She was able to double the pre-seed amount she sought, but she attributed that to her investors. 90% of them are Latina and all are women.
"Even in the middle of a pandemic, of an economic downturn, they saw the need," she said. "I didn't have to oversell myself."
Acevedo, the founder of millennial media company mitú, which was sold to Latido Networks earlier this year, said she had a much harder time when she sought to raise money from traditional investors, most of whom were white men.
"I'm kind of like an outlier," she said. "I'm incredibly grateful and I understand I'm in a position of privilege because not only am I a woman, but I'm a woman and I'm an immigrant. I'm over 50. I've never been in FinTech."
Funding for female founders across the country dropped 31% from the first three quarters of 2019. That's compared to a 16% drop to all-male founders.
Yet, female-founded companies exited faster than the overall market. Pitchboook found that 2020 was on track to mark the 10th straight year of that trend.
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Los Angeles is home to thousands of founders working day and often night to create a startup that's the next breakout hit.
Who are the most impressive L.A. founders? To find out, we asked our cohort of dozens of L.A.'s to VCs top weigh in.
Andrew Peterson<p>Andrew Peterson is the co-founder and former chief executive of Signal Sciences, a web application security platform that he founded in 2014 and <a href="https://dot.la/signal-science-snapped-up-for-775m-in-big-l-a-saas-exit-2647256430.html" target="_self">was acquired in 2020 by Fastly in a $775 million deal</a>. Signal Sciences protects web applications from attacks and data breaches for clients like Duo Security, Under Armor and DoorDash.</p><p>Prior to starting Signal Sciences, Peterson worked at Etsy, helping the online marketplace with international growth as a group project manager. Etsy <a href="https://www.fastcompany.com/3056900/how-three-ex-etsy-employees-turned-their-old-employer-into-a-consumer" target="_blank">reportedly became </a>one of Signal Sciences's first customers. Peterson has also served stints as health information management officer at the Clinton Foundation and as a senior product specialist at Google.</p>
Ara Mahdessian<p>Ara Mahdessian is the co-founder of ServiceTitan, a SaaS product for managing a home services business.</p><p>The inspiration for ServiceTitan, Mahdessian's first company, came from watching his parents start their own businesses in building and plumbing, only to struggle with the logistics behind keeping them running, he <a href="https://www.inc.com/magazine/201906/emily-canal/servicetitan-immigrant-inclusion-diversity-best-workplaces-2019.html" target="_blank">told Inc in 2019</a>. Mahdessian and his co-founder Vahe Kuzoyan met while in college, and worked on several consulting projects before starting ServiceTitan, in hopes of aiding small business owners like their parents.</p>
Evan Spiegel<p>Evan Spiegel is the co-founder and chief executive officer of Snap Inc., the Venice-based company known for its app Snapchat. He's also one of the youngest billionaires in the world, launching Snapchat while still an undergraduate at Stanford. </p><p>SnapChat, the company's app, has recently been taking on rival TikTok <a href="https://dot.la/snap-spotlight-2649022645.html" data-linked-post="2649022645" target="_blank">with a new feature</a> and a program meant to attract creators to its platform. And it is been at the center of a larger national debate on the power of big tech. </p>
Spencer Rascoff<p>Spencer Rascoff is the founder of several companies, including dot.LA. He started his career as an investment banker at Goldman Sachs, later leaving to co-found travel website Hotwire. After serving as vice president of lodging at Expedia, he went on to found Zillow, an online real estate marketplace that went public in 2011.</p><p>Rascoff's most recent project is Pacaso, a marketplace for buying, selling and co-owning a second home.</p>
Tim Ellis<p>Tim Ellis is the co-founder and chief executive of Relativity Space, an autonomous rocket factory and launch services leader for satellite constellations. He is the youngest member on the National Space Council Users Advisory Group and serves on the World Economic Forum as a "technology pioneer."</p><p>Before founding Relativity Space, Ellis studied aerospace engineering at the University of Southern California and interned at Masten Space Systems and Blue Origin, where he worked after graduation. He was a propulsion engineer and brought metal 3D printing in-house to the company.</p>
Travis Schneider<p>Travis Schneider is the co-founder and co-chief executive of PatientPop, a practice growth platform for healthcare providers. He founded the company with Luke Kervin in 2014. <br><br>The two have founded three companies together, including ShopNation, a fashion shopping engine that was later acquired by the Meredith Commerce Network.</p>
Luke Kervin<p>Luke Kervin is the other co-founder and co-chief of PatientPop. He is a serial entrepreneur — his first venture was Starbrand Media, which was acquired by Popsugar in May 2008. <br><br>Kervin and Schneider then founded ShopNation, and when it was acquired in 2012, Kervin served as the general manager and vice president at the Meredith Commerce Network for a few years before leaving to found PatientPop.</p><p>Kervin had the idea for PatientPop when he and his wife were expecting their first child, he told <a href="http://voyagela.com/interview/meet-luke-kervin-patientpop-santa-monica/" target="_blank" rel="noopener noreferrer">VoyageLA</a>. They were frustrated with how the healthcare system wasn't focused on the consumers it was meant to serve. So in 2014, he and Schneider created PatientPop.</p>
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