'All the Progress We've Seen Could Be Erased': Data Shows the Pandemic Has Hit Women Harder
Tami Abdollah is dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer. Follow her on Twitter.
If the rule is to follow the money, then VC deal flow shows how singularly bad this pandemic has been for female entrepreneurs compared to their male peers.
By and large, anytime a woman was involved in the founding of a company, venture capital investment dollars dropped significantly and there were fewer dollars per deal overall, according to a dot.LA analysis of year-over-year Q3 PitchBook data for Los Angeles, the Bay Area and Seattle.
Notably, PitchBook does not have data that accounts for the race of founders in their analysis and it has not previously been formally tracked. A spokesperson said the company is working on it.
Much has been written on this issue, year after year, and in study after study, including around the idea that women allegedly simply opt-out of the workplace. But the pandemic has laid bare systemic inequities that have led women to be disproportionately impacted by the conflation of work and home life. New data from the Bureau of Labor Statistics monthly job report showed that women, especially Black and Latina women, were four times more likely than men to drop out of the labor force in September, according to an analysis by the National Women's Law Center. Of the 865,000 workers who left the labor force, 80% were women.
Among those inequities has been a large gender gap in VC funding. The data shows that the pandemic has made that far worse.
In the L.A. metropolitan region, VC investment dollars for all-female-founded companies dropped by 70% — from $83.2 million to $23.4 million — in a year-over-year comparison during the third quarter.
Data from Pitchbook
Interestingly, VCs invested much less money in more deals — with deal count rising from nine to 12 deals.
The story is very different for companies that have male co-founders, and at least one female. In Q3, investment actually rose year-over-year, from $183.8 million to $390.4 million, or 16 to 50 deals, respectively. In this case, VCs again spent less per deal in the third quarter, but overall investment dollars rose.
For all-male founders, the pandemic appears to have been a boon, at least in terms of raising funds. VC investment rose by 385%, from $742.8 million to $3.6 billion year-over-year in Q3. Those numbers equated to a rise in deal count, from 47 to 118, which showed that VCs in fact spent more money per deal on average than for any company with any female founder.
Data from Pitchbook
In an unsparing column entitled "Investing in Women isn't a Fucking Charity," Jesse Draper, founding partner of female-focused Halogen Ventures, wrote last month about some of the sad and painful realities of being a woman in a male-dominated field and how "boneheaded," financially, it is to not invest in women.
"On a macro level, the lack of diversity in the industry is a problem because it means most of the money flows to types of founders VCs understand — businesses with white men of a certain socioeconomic background as their target customer," Draper wrote. "It means fewer great businesses have the opportunity to thrive. It means we put fewer products out into the world that improve the lives of women, BIPOC, and marginalized communities."
dot.LA found the trend in PitchBook data was similar for Q3 in the Bay Area and Seattle. In both those regions, all-male founders saw a significant increase in investment dollars and money spent per deal in the third quarter versus the same period a year earlier. They also received more money per deal than if they had a female co-founder.
Data from Pitchbook
In the Bay Area, that looked like a jump from $2.8 billion for 161 deals in Q3 2019 to $11.93 billion for 385 deals in this last quarter — for all male founders. For all female founders, the deal flow increase was a pale comparison, up from $98.6 million for 14 deals last Q3 to $141.6 million for 20 deals.
Seattle VCs invested $1.5 billion for 79 deals with all-male founders, up significantly from $700,000 for 23 deals in Q3. All-female founders received a boost in Seattle because the single Q3 2019 deal involved an unknown amount of money, per PitchBook's data. In Q3 2020, all-women founders received $13.5 million spread over eight deals.
A PitchBook spokesperson said the company is working on a larger report examining such pandemic-related investment trends and their impact on women in an upcoming December report.
Of course, the drop in VC investment in women founders may be symptomatic of a broader societal shift.
The annual "Women in the Workplace" study by McKinsey & Company and LeanIn.Org noted that "Covid-19 has disrupted the workplace in ways we've never seen before" as women end up juggling more housework and caregiving burdens amid school closures. The report found that for the first time in the annual study's years researchers saw signs that women are leaving the workforce at rates higher than men.
"If these women feel forced to leave the workforce, we'll end up with far fewer women in leadership—and far fewer women on track to be future leaders," the report, released September 30, warned. "All the progress we've seen over the past five years would be erased."
Join dot.LA on Tuesday, Oct. 27, 2020 for an exclusive panel around these issues at our inaugural summit.
Do you have a story that needs to be told? My DMs are open on Twitter @latams. You can also email me at tami(at)dot.la, or ask for my contact on Signal, for more secure and private communications.
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The spread of the novel coronavirus has sped the adoption of telemedicine in the United States, eliminating barriers like insurance reimbursements. It's also shone a light on the need for faster vaccines and a need for greater investment in public health, experts said on a dot.LA virtual panel Tuesday that looked at how investors are responding to COVID-19.
A move to telemedicine "was a long time coming," said Dr. Jeffrey Klausner, a professor of medicine in the division of infectious diseases in the David Geffen School of Medicine at UCLA. "A lot of doctors and institutions weren't comfortable with that" but now those concerns have been "blown out of the water." Since the pandemic erupted, two-thirds of UCLA medical visits have been done using telehealth.
Dr. Jeffrey Klausner, MD, MPH, is a Professor of Medicine in the Division of Infectious Diseases in the David Geffen School of Medicine.
Jeffrey Klausner, MD, MPH, is a Professor of Medicine in the Division of Infectious Diseases in the David Geffen School of Medicine and Adjunct Professor of Epidemiology in the Fielding School of Public Health.<p>Dr. Klausner earned his Medical Degree from Cornell University Medical College with Honors in Research. He completed his Residency in Internal Medicine at the New York University—Bellevue Hospital Center. Dr. Klausner earned his Master's in Public Health with a focus on International Health and Epidemiology at the Harvard School of Public Health. After that training, Dr. Klausner was an Epidemic Intelligence Service Officer at the Centers for Disease Prevention and Control. Dr. Klausner completed his Fellowship in Infectious Diseases at the University of Washington, Seattle.</p>
Jay Goss is General Partner at Wavemaker Three-Sixty Health
Jay Goss, General Partner @ Wavemaker Three-Sixty Health<p><span id="selection-marker-1" class="redactor-selection-marker" data-verified="redactor"></span>Jay is a General Partner at Wavemaker Three-Sixty Health. Wavemaker Three-Sixty Health is Southern California's leading Seed-stage healthcare-focused venture capital fund. The fund's investment thesis is that after 40+ years, healthcare is transitioning away from fee-for-service to value-based payments, and with that comes a massive amount of disruption. There will be no shortage of clinical operations and business challenges to solve in the coming decade, and entrepreneurs are already coming out of the woodwork to solve these problems. Moreover, countless business models are now for the first time commercially viable because the healthcare industry is embracing value-based payments. The fund counts among its investors 50+ healthcare senior executives, eager and extremely able to add value to the early stage companies in which the fund invests. Prior to launching Wavemaker Three-Sixty Health, Jay operated dozens of early stage companies all over Southern California, and advised dozens more.<span id="selection-marker-2" class="redactor-selection-marker" data-verified="redactor"></span> </p>
Llewellyn Cox is a general partner at MarsBio
Llewellyn Cox, General Partner at MarsBio<p>Llewellyn is an entrepreneur from Gillingham, Kent, England. He founded LabLaunch, the leading biotechnology incubator network in Southern California, and BioBuilt, a firm that assists early-stage companies in building lab space.Llewellyn received a Ph.D. in Molecular and Cell Biology at Cardiff University, before moving to New York City to perform postdoc research in neuroscience at Weill Cornell Medical College. Llewellyn is an adjunct professor at Keck Medicine of USC where he teaches translational biology and science communications.</p>
Rachel Uranga, is a reporter at dot.LA.
Rachel Uranga, Reporter @dot.LA<p>Rachel covers the intersection of business, technology and culture. She is a former Mexico-based market correspondent at Reuters and has worked for several Southern California news outlets, including the Los Angeles Business Journal and the Los Angeles Daily News. She has covered everything from IPOs to immigration. Uranga is a graduate of the Columbia School of Journalism and California State University Northridge. A Los Angeles native, she lives with her husband, son and their felines. </p>
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