Women and people of color traditionally receive less money in funding than their white-male counterparts. 💡 Think about ways you can help to change this!


VCs have allocated less than 3% of capital to businesses with female founders and evidence suggests that gender bias still accounts for up to 35% of this funding gap. While improvements are being made on this front, more than 80% of deals still go to male-only founder teams.

“Because average deal size is smaller for firms with female founders than for those with male-only founders, the share of total capital allocated to female-founded firms is smaller than deal share. There have been no meaningful changes to female-founded only share of capital invested… Firms with only male founders received 88% of VC capital in 2019.” Source: Pitchbook Female Founders Dashboard, Guzman & Kacpercyzk, 2019.

Causes for this gap, as cited in the Frontiers in Entrepreneurship: 2020 Trends in Entrepreneurship Full Report :

An image titled "Causes for this gap: the signaling gap." The image reads: " Why are fewer high-growth startups founded by women? 1. Gender segregation and motherhood penalty. 1 a. The perception of women as more committed to family obligations and thus less of an "ideal worker" limits advancement opportunities. 1 b. A lack of female advancement into high-level positions and in high-profitability industries limits women's exposure to nevessary resources and opportunities for high-growth ventures. 2. Gendered careers and social norms. 2 a. Women's career choices continue to be constrained by family obligations and household chores. Research indicates a normative expectation remains that family and household obligations are a woman's responsibility. Women are more likely to be pushed into careers that attempt to accommodate these societal obligations. 2 b. Women may use entrpreneurship to obtain better control over their schedules and/or to reduce childcare costs. These ventures are less likely to be high growth, to hold intellectual property rights or to be incorporated."An image that is titled: "Causes for this gap: The funding gap". The image reads: "Why do women-founded start-ups receive less funding? 1. Investor bias. 1 a. There is a perception of females as less competent entrepreneurs than their male counterparts. 2 b. Negative stereotypes undermine female representation in male-dominated fields. 2. Lack of social capital and the importance of networking. 2 a. Women are often excluded from valuable networks resulting in a social network disparity between genders. Women tend not to have access to investor circles and networks. 2 b. Women experience additional network frictions, such as exectation of bias or harassent, that might dissuade women from more proactively reaching out to other networks without a formal introduction. 2 c. due to smaller networks, women face increased obstacles in gaining support and mentorship for high-growth venture."

People of Color

The lack of VC funding for minority entrepreneurs is in part from underrepresentation in VC firms. Many of the above causes for the gaps stated for women are the same for people of color.

🎧 Listen to this excellent podcast: Business Scholarship Podcast where Professor Jennings interviews Professor Carlos Berdejó on his latest scholarly work: Financing Minority Entrepreneurship. I recommend reading the article in its entirety when time permits.

You read this article by James Norman earlier in the semester, but it warrants another read within our capital raising context.

“Because Black and brown entrepreneurs continue to be the engine of employment in Black and brown communities, an equitable recovery requires us to rewrite how capital and access to capital work. To do so, capital decision-makers need to be knowledgeable about the history and root causes of the country’s racial wealth gaps. And, we need to explore new ways of investing in fund managers of color.” Philip Gaskin and Demetric Duckett, Ewing Marion Kauffman Foundation, “Leveraging Entrepreneurship to Close Racial Wealth Gaps,” October 20, 2020. 📖 Read the Gaskin and Duckett article.


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To the extent possible under law, Samantha Prince has waived all copyright and related or neighboring rights to Entrepreneurship Law: Company Creation, except where otherwise noted.