New report: Female founders and female emerging fund managers prove resilient in challenging times

It wasn’t that long ago that we wrote that gender inequalities are still an issue that is very present in the European tech ecosystem. One of the issues surrounding gender inequalities among tech founders involves funding or the lack thereof, that goes to a female-led team.

But, despite the challenging fundraising environment, especially in the last couple of years, female founders and female emerging fund managers in Europe have proved resilient. This is highlighted in “The State of Gender Diversity in European Venture report 2024” published by Female Foundry, a network of 6,000 investors and female founders across Europe.

As stated in their report, in 2023, European startups with a female co-founder raised €5.9 billion. Additionally, European funds (co-)led by women investors announced the raise of €4.4 billion in fresh capital to be deployed to support the future growth of European startups.

Improvements in the female founder's landscape

Investments in European female-founded companies show that there is awareness that this issue of inequality is slowly but surely changing. After peak years of 2021 and 2022, the total of €5.9 billion makes 2023 the third highest year on record in terms of funding raised.

Despite a challenging fundraising climate, 11 per cent of total venture capital deployed in Europe in 2023 went to female (co-)funded startups, thus making a 1 per cent increase compared to a year before.

The report goes on to highlight that female entrepreneurs in Europe are raising bigger rounds, with the most significant change seen at the Series C level, with an average round size of €80 million. Compared to a year before, it was an increase of 45 per cent. The average Series A round size reached €11 million, representing a 38 per cent increase.

When speaking of mega-rounds, four female-founded companies raised €100+ million in 2023 while Newcleo announced the partial close of a $1 billion round. Although there were no female-founded IPOs, one female-founded startup, UK-based Synthesia, achieved unicorn status.

Geographically speaking, in terms of the percentage of venture capital invested in female-founded startups, the UK and Denmark took the leading position (with 16 per cent and 15 per cent respectively). Additionally, some notable deals showed progress in investments in female-founded startups. Thus, SustainCERT’s €35 million and TaDaweb’s €15 million rounds brought Luxemburg on the radar, with around 40 per cent of the share of investment into female-founded startups.

Increased interest among investors on female-founded companies

Among European VC investors, 70 per cent confirmed that they are keeping track of female founders going through their deal flow, while 40 per cent reported that compared to 2022, they dedicate more time to proactively finding investment opportunities in companies (co)founded by women.

The results also show that female entrepreneurs are highly educated. According to the report, 90 per cent of all female entrepreneurs on the 2023 list of 50 top rounds have an MSc or BSc degree.

Despite a challenging climate for Venture Capital fundraising globally, female GPs and first-time managers in Europe stay resilient, raising 76 per cent more capital in 2023 (€4.4 billion) compared to a year before (without the outlier fundraising of EQT Group's €17 billion in 2022).

In 2023 there were 26 new female-led funds announced by 22 female GPs, making thus an increase of 73 per cent compared to 2022 (with 15 new funds announced by 13 investors). In geographical terms, the UK, France, Spain and Germany dominate making 70 per cent of all Europe’s female fund managers with a new fund announced in 2023.

Agata Nowicka, CEO of Female Foundry and creator of the State of Gender Diversity in European Venture report said:

“Despite the challenging macro fundraising climate, female entrepreneurs and emerging fund managers in Europe continue to build and innovate. The 2024 Female Foundry State of Gender Diversity in European Venture Report clearly demonstrates not just the resilience of female entrepreneurs and investors, but also highlights the significance of the untapped potential for innovation driven by these women, which is crucial for Europe's future.

Challenging times serve as fertile ground for innovation, and so, it could not be a better time for investors to step up and meet the ambitions of female founders and fund managers who are at the forefront of new business creation in Europe.”