Despite a tough market, female founders are showing resilience in the venture capital landscape

Nearly a decade ago, venture capital funds with a gender diversity strategy were hard to come by in America’s vast heartland between the coasts.

Austin-based True Wealth Ventures set out to remedy that. He is looking for financially more successful startups led by women that aim to improve environmental or human health.

General partners Sara Brand and Kerry Rupp began raising money for their company’s first two investment funds and quickly discovered that most of their investors had never even been invited to invest in a private equity fund. risk. They didn’t have it either, despite being veterans of the tech industry.

“So that’s been our real goal now, to have more of a local network of women venture capitalists and we think Texas is uniquely positioned for that.” says the mark.

Women make up less than one-fifth of venture capital firm executives and less than 5% of stores have a majority of female check writers, according to a Pitchbook report examining U.S. venture capital trends for women over the past of the last 14 years.

Having more female decision-makers or general partners in venture capital firms can open doors for female founders to access needed capital and provide limited partners with diverse investment opportunities, the report says.

Companies founded by women account for a quarter of the total number of venture capital deals this year. But the amount of money paid to them represents less than 3% of the $158.5 billion invested this year.

To make the venture capital landscape fairer, there has been a focus on increasing the number of women in decision-making positions within companies, said Pitchbook analyst Annemarie Donegan. Women entrepreneurs can greatly benefit from having someone at the table who could better understand a company’s demographics.

“While we expect to see the number of female GPs increase, we can also expect to see an increase in venture capital dollars awarded to female founders,” Donegan said.

True Wealth’s Rupp said her company’s decision to support women entrepreneurs was a financial thesis.

“It wasn’t just a feminist manifesto,” Rupp said. “It’s an opportunity for outsized returns and it’s being overlooked.”

Year-to-date data through September 30 shows VC deals with female founders total $32.4 billion, making 2022 the second-largest year for them in terms of value agreements. The 2,800 deals involving women-founded businesses rose 39% this year, Donegan said.

Of the 16 companies in True Wealth’s portfolio, nearly a third of the founders are Texas-based, like Austin’s Claire Siegel, who is gearing up for another venture capital round in 2023. She’s one from the founders of Flourish, a subscription app. which offers personalized health coaching for women.

Prior to launching and working with True Wealth, his first outside investment was through a technology acceleration program. While Siegel’s cohort was filled with various founders and ventures, she knew outside of the incubator that she would most likely introduce Flourish to men.

“I knew I wasn’t necessarily going to a world full of people who looked like me, or even understood me, or the problem I was trying to solve,” she said.

While the pitch process can be nerve-wracking, Siegel said she’s focused on how to present the company’s potential for financial success in a way that resonates with any investor.

“It’s not philanthropy,” Siegel said. “It’s not charity work to invest in women-led businesses. It’s an incredible opportunity to invest in a great company that is doing good in the world and will have incredible returns.

Across the country, results have been mixed in how businesses are navigating this year’s tough investment market after a year of all-time highs in 2021, Donegan said.

In Dallas-Fort Worth, the venture capital tap has tightened considerably this year for companies founded solely or jointly by women. They raised $272 million in 33 deals. Last year, startups founded by women raised a record $969 million in 35 deals.

When it comes to dollars invested, Texas businesses founded by women lag behind their coastal counterparts. Texas companies have attracted nearly $8 billion in capital in more than 1,300 deals over the past 14 years, and more than half of the money invested has gone to Austin-area companies.

The San Francisco Bay Area tops the list with more than $61 billion in invested capital over a 14-year period, followed by New York, Los Angeles and Boston.