'All the Progress We've Seen Could Be Erased': Data Shows the Pandemic Has Hit Women Harder

'All the Progress We've Seen Could Be Erased': Data Shows the Pandemic Has Hit Women Harder

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.


Subscribe to our newsletter to catch every headline.