We’re living in an era of angels, where venture capitalists and angel investors are becoming more prominent in the venture capital space, a move that’s expected to further boost the profile of women entrepreneurs in the sector.
Angel investors and VCs have invested in more than 3,000 women-founded companies in the US since 2015, according to the AngelList, a website that aggregates data on the industry.
But according to a new report, only 1% of those companies are female-founded, which is less than one-third of the overall rate.
While there is a significant number of female-led companies in Silicon Valley, according the report, less than 1% are female companies, and that’s despite having more than $4.5bn in venture capital funding from the US government between January and August of this year.
This lack of visibility for women-led tech companies can be partly attributed to the high cost of financing, which makes it more difficult for women to break into the industry and has a negative impact on women’s economic and career prospects, says Lauren Denniston, founder and CEO of the female-run AngelList.
“I think this lack of recognition of women as entrepreneurs in this space, in particular in the early days, is a really big issue,” she told TechRadars.
AngelList says women-only companies account for 1% to 2% of venture capital raised in the past year, which may be due to a number of factors.
In its 2017 annual report, for example, AngelList said that it “lacked the resources to fully profile, fund, and manage female-focused startups” and “has not adequately targeted and incentivised funding for this category of startups.”
The report also said that AngelList is focused on “non-traditional female-owned startups that have demonstrated a clear path forward in technology, or are poised to be,” and “that lack of focus may have a direct impact on the diversity of the portfolio.”
There’s also a lack of diversity in the leadership team at companies that are women-owned, which Dennerton says can be an issue when it comes to funding.
“It’s an issue of funding, because a lot of the venture money that’s going to women-focused companies is going to venture capital firms that don’t understand or care about women,” she said.
“So, there’s a lot more money at stake in the pipeline for women in the tech space.”
Dennertons list of AngelList’s top five most recent female-authored venture-backed companies includes: Tarte, a beauty and homecare startup that launched in 2016.
Founded by a former Uber driver and former fashion designer, Tarte has raised $1.3bn in seed funding, mostly from investors including Andreessen Horowitz, Andreessen, Andre, Kleiner Perkins, and Accel Partners.
The company’s founder, Nicole Hough, is the founder and chief executive officer of the company.
She says Tarte is currently on track to break even by 2019, with revenue of $3m by 2021.
Hough is also working on a series of clothing and home goods items for women, which she hopes will help women “become more empowered and feel like they’re in control of their own destinies”.