Gender equity in venture capital and support for female startup founders are crucial drivers of innovation, economic growth, and societal progress. Promoting gender equity isn’t just a moral imperative. It’s a business advantage.

Despite recent strides on this front, though, female-founded companies continue to face major funding hurdles. Disparities in venture funding between women-led startups and those run by men continue to grow.

‍Case in point: Women-led startups accounted for less than 2% of total VC activity and 6.4% of deal count in the U.S. in 2024, according to a Carta report.

Thankfully, there appears to be a growing awareness of this funding gap.

The number of venture funds specifically dedicated to female-led businesses is increasing worldwide, and more women are earning strategic decision-making roles related to portfolio growth within VC firms.

Studies continue to show that diverse leadership teams at companies of all kinds and sizes are more innovative, make better decisions, and deliver higher ROI than their non-diverse counterparts. 

For startups, where agility and creativity are vital, fostering gender equity is essential to building resilient, forward-thinking companies that can thrive in an increasingly complex and rapidly evolving market.

How we got here: What data reveals about the current startup founder landscape

Just to reinforce just how much more progress needs to be made on the women-in-leadership front:

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• In 2023, women accounted for just 13% of all startup founders, Carta research found. That’s down from 15% in 2022 and the lowest percentage since 2018.

• Within the SaaS sector — a cornerstone of VC investment, due to its scalable models, predictable recurring revenue, and adaptability across industries — women made up only 11% of all founders in 2023.

• Out of any niche technology vertical, the HealthTech space had the most female-founded companies in 2023, but only leading the way with a 22.3% share.

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It’s clear: This persistent disparity stems from structural biases, the lack of diversity among decision-makers in VC firms, and limited access to traditionally male-dominated networks and mentorship.

While there has been some progress in diversifying venture capital teams globally, women still represent only about 18% of decision-makers at U.S. VC firms. Encouragingly, though, more women are entering VC in early-career roles, such as analysts and associates, reflecting efforts to expand talent pipelines.

However, the transition to senior and partner-level positions at venture funds remains disproportionately low, emphasizing the persistent gap in leadership representation within the industry.

Harvard Business School research shows a strong correlation between gender equity and organizational success. 

What’s more, startups founded or co-founded by women also tend to perform better over time. A Boston Consulting Group study found women founders generated 10% more in cumulative revenue over a five-year period than all-male teams, highlighting the potential for women-led leadership teams.

It’s not hard to find examples of startups and enterprises that have benefited substantially from women leaders. In recent years, several female-founded companies have achieved remarkable success. Consider Spanx:

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• Founded by Sara Blakely, Spanx revolutionized the shapewear industry and grew into a multi-billion dollar company that remains a leader in the increasingly competitive retail vertical.

• Despite facing rejection from numerous investors who doubted Blakely’s vision, she remained determined.

• Unable to secure funding, Blakely bootstrapped the business with her own savings, and she has grown it so successfully that she was previously the world's youngest female self-made billionaire

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“I've always had that gratitude that I had the opportunity to pursue my potential,” Sara noted. “So I think my story says that, when women are given the chance and the opportunity, that we can achieve a lot. We deliver.”

Blakely's success with Spanx and her challenges in securing funding are not unique.

Other female-founded companies like Bumble, Drybar, Warby Parker, Shipt, Stitch Fix, and Eventbrite have achieved huge success in industries such as tech, beauty, retail, and logistics, despite many of their founders facing difficulties securing outside private investment.

Seven in 10 venture capitalists know diversity fuels innovation, with funds led by mixed-gender teams outperforming all-male teams by 9.3 percentage points.

These findings demonstrate that diverse teams can spark creative solutions and deliver superior financial outcomes.

As Susanne Althoff, author of “Launching While Female: Smashing the System That Holds Women Entrepreneurs Back,” explained at a recent MIT Trust Center for Entrepreneurship speaker series, “The entrepreneurial path is harder than it should be [for these groups]. We’re all missing out on innovation when we do not see full entrepreneurial participation in this country.”

Gender equity isn't just about fairness. It's about unlocking untapped innovation that benefits the entire startup ecosystem, domestically and globally.

Walking the walk: What must happen for greater gender equity in startup leadership

So, what can be done to pave the way for more women to get financial backing for their businesses?

To better support female founders, it’s crucial to create pathways that increase their visibility and access to capital. Multiple stakeholders — including (but certainly not limited to) VC firms, venture studios, current startup founders, and corporate executives — can all contribute to making a difference.

Venture capital firms, in particular, though, have a key role to play in championing female founders by increasing the representation of women in their leadership and investment roles.

Establishing diverse leadership teams within VC firms drives stronger ROI by fostering inclusive decision-making processes that prioritize gender equity, leading to more innovative investments and broader market appeal. 

Additionally, VC firms can take proactive steps by creating funds or allocating a specific percentage of investments for female-founded or female-led businesses, as seen with the Female Founders Fund. This strategy helps bridge the gender funding gap while signaling a clear commitment to advancing female entrepreneurship. 

Both venture studios and VC firms can also create networks and mentorship opportunities for female founders, empowering them with the resources, guidance, and visibility they need to scale successfully.

These actions work together to cultivate a more equitable VC ecosystem where female founders are empowered to thrive.

“I cannot emphasize this enough: Black and Brown entrepreneurs, especially women, need access to new networks,” Black Girl Ventures Founder Shelly Bell aptly stated. “I believe in the power of building community to bring about systemic change … [and] everyone can play a part.”

Women in the field, both investors and founders, have the opportunity to be at the forefront of the change they want to see in the VC space. Lily Lyman, General Partner at Underscore VC, said it best:

“Dream big, be excellent, and support other women along the way.”

At High Alpha Innovation, we’re actively working to build a more diverse portfolio and foster inclusivity.

While we are still at the beginning of this journey — we just recently hired another female founder for one of our new portfolio companies — we continue to prioritize diversity within our own team, and we are committed to fostering an environment that embraces inclusivity and innovation.