Propelling Tech Industry Success For Women: The Right Funders and the Right Insights

The discussion around funding women entrepreneurs is growing more active by the day. One thing is clear: driven women entrepreneurs aren’t willing to accept a funding system that favours male founders out of familiarity and prejudice.

Why the Funding Gap Matters

Startups that want to grow fast usually need outside money, and much of it comes from angel investors and venture capital firms. Those investors tend to back people they know or founders who remind them of past successes. When most investors are men, that habit can work against women, even when nobody intends it.

The result is a gap that shows up in the numbers. Founders who can’t raise outside money have to grow more slowly, rely on their own savings, or give up on ideas that need capital to work. That’s why the advice and funding networks below matter so much.

The Business Case

As strategist Allison Collinger points out in her push to a Forbes piece, funding women makes bottom-line sense:

How Investing In Women Entrepreneurs Can Be A Surefire Way To Good ROI via @forbes https://t.co/RgBPP2qpER #CDFI #WomenFundingWomen

— Allison G. Hawk (@AllisonGailHawk) January 10, 2017

The argument is simple: if investors pass over good companies because of who founded them, they leave returns on the table. Backing women founders isn’t charity in that view, it’s a way to find opportunities other investors are missing.

Advice From Founders Who Raised

Payal Kadakia’s contribution to this roundtable of women founders on funding? “Highlight your ability to solve problems and persevere no matter what challenges come up.”

6 of today’s most successful female founders share their insights on navigating the funding process: https://t.co/L16QpXNrlS pic.twitter.com/jxR6RYWNZE

— ForbesWomen (@ForbesWomen) December 30, 2016

Kadakia had good reason to talk about persistence. ClassPass, the fitness class subscription company Kadakia co-founded, didn’t start out in its familiar form: it began in 2010 as Classivity and changed its model before launching as ClassPass in 2013. In January 2020, CNN reported that ClassPass had raised $285 million and passed a $1 billion valuation, making it a “unicorn.” It had grown from four to 28 countries in 18 months and worked with more than 30,000 studios, gyms and wellness partners.

The story continued from there. In October 2021, Mindbody acquired ClassPass in an all-stock deal, a successful exit for a company co-founded by a woman who’d been advising other women founders on how to raise money.

How Women Founders Pay for Their Businesses

Girls in Tech points to a telling stat in this Tech.Co gathering of tips for women founders on the funding market: “Nearly 80 percent of the women in the study used personal savings as their top funding source, even though 31 percent of them had angel investors and 14 percent had venture capital funding.”

3 Tips for Female Entrepreneurs to Get VC Funding https://t.co/ngTYU1EFyF

— Girls in Tech (@GirlsinTech) December 21, 2016

That stat says a lot. Even among women who had outside investors, their own savings were still the main source of money. Funding a company that way limits how fast it can grow, and it puts the founder’s personal finances at risk if the business struggles.

Women are driving other women to thrive and succeed in the tech startup world. Whether that help comes in the form of funding or actionable advice, it brings us closer to achieving gender balance—and the increased flow of great ideas and products that comes with it—in the tech industry.

Where Things Stand Now

Progress on the funding gap has been slow. PitchBook data reported by TechCrunch in July 2024 showed that companies with all-women founding teams had never raised more than 3% of US venture capital in any year since at least 2014, and had taken about 2% a year over the previous four years, even when overall venture investment hit record highs.

The same report found that most female-founded companies are still at the seed and early stages, where raising the next round has become harder. PitchBook’s lead venture analyst, Kyle Stanford, told TechCrunch that “investment in women and diverse founders is also challenged by the current political climate.”

What It Means for Women Founders

The advice from 2017 still holds. Build a pitch around the problems you’ve solved and the setbacks you’ve worked through, as Kadakia suggested. Look for investors and networks that already back women founders, since they’re more likely to understand your business. And if you’re relying on personal savings, plan for how long that money will last and when outside capital will make sense, so the business doesn’t stall for lack of it.