Kate Ryder hit some roadblocks when she started pitching investors Maven, a digital company focused on giving women and families better health care access.
“It’s no secret that more than 90% of venture capitalists are male, and many of them didn’t see the opportunity in the market,” she told Barron’s. “It was hard to get investors excited about something that many of them couldn’t personally relate to.”
Ryder had more luck after reaching out to other women entrepreneurs and investors. Maven has since raised $42 million, with $27 million of that from a Series B round last year. But such funding success is rare for women-led companies—even as venture capitalists are pouring more money into start-ups than they have in 18 years.
Last year, companies founded exclusively by women got an even thinner slice of the funding pie, according to new research from PitchBook Data, which follows venture capital, private equity, and M&A transactions.
Start-ups with only female founders received $2.9 billion in venture capital investments in 2018, or 2.3% of total dollars invested, down from 2.7% in 2017. So far this year, the percentage is at 1.4%, PitchBook says.
While deals involving all-women-led start-ups have quadrupled since 2008, they still represent just 6% of all deals in 2018, according to PitchBook VC analyst Joelle Sostheim. (This year, that ratio is at 5.8% currently.)
“There is progress in terms of a rise and interest in women led and founded companies. Now we need to see that translate to VCs investing in them,” Ryder said. Among the start-ups founded by women that did receive significant cash infusions were luxury consignment company The RealReal ($115 million in funding) and medical research firm Humacyte ($75 million).
But generally, challenges raising capital can be a common theme.
Eugenia Kuyda, co-founder and chief executive of Replika, the artificial intelligence company she started in her native Russia in 2015, requested or went to some 150 meetings seeking funding. She got a flat no for 145 of them, she said.
“It took quite a long time” to get funding, Kuyda recalled. “It’s just hard to raise money as an outsider, especially from a nontechnical founder from Russia, and maybe being a girl,” Kuyda told Barron’s in a phone interview. “It would have probably been easier as a Stanford graduate.”
Her persistence—and some help networking through Y Combinator, a seed accelerator that helps early-stage start-ups get funding—eventually paid off. Last year, Replika closed a $6.5 million Series A round led by Khosla Ventures.
Maven’s Ryder attributes her success to a strong support network, especially female investors:
“I’ve found that many female venture capitalists innately understand the value proposition and are more passionate about our business.”
The company’s Series B round was led by Sequoia Capital and Oak HC/FT, with contributions from Spring Mountain Capital, 14W, and Female Founders Fund.
Jess Lee, who is leading the investment from Sequoia, is the firm’s first female investment partner in the U.S. Oak, led by Annie Lamont, is the only women-led venture-capital firm in health care. Nancy Brown, a partner who spent more than two decades at leading health care companies, is leading Oak’s investment.