VC funding is the lifeblood of innovation, enabling entrepreneurs to scale their ideas into world-changing businesses. Yet, for women, access to this critical resource remains alarmingly limited. In 2023, startups founded solely by women received less than 3% of global VC funding—a statistic that has stubbornly remained unchanged for years (Forbes, 2023).

This figure isn’t just a number; it’s a stark reminder of the systemic barriers women face in the VC ecosystem. So, why does this disparity persist, and more importantly, how can we change it?

Despite evidence showing that women-led businesses often outperform their male counterparts in return on investment, women—especially women of colour—continue to face bias and stereotypes when seeking VC funding.

Key issues include:

1. Investor Bias: The VC space is still dominated by men, many of whom unconsciously (or consciously) view women-led businesses as riskier investments.
2. Network Gaps: Women often lack access to the same networks as their male counterparts, limiting their opportunities to secure funding.
3. Systemic Barriers: With fewer women in decision-making roles within VC firms, female founders struggle to find advocates who understand their vision.

The result? An outdated system that fails to recognise the potential of women entrepreneurs.

1. Hold VC Firms Accountable
   Transparency drives change. By requiring VC firms to report on the gender breakdown of their portfolios and setting measurable goals for investing in women-led businesses, the industry can start to address its biases. Firms that fail to meet diversity benchmarks could face penalties, while those that excel could be incentivised.
2. Increase the Number of Women Investors
   Representation matters. Female investors are twice as likely to back women-led startups (startups.co.uk, 2024). Yet, only 18% of decision-makers in venture capital are women (British Business Bank, 2024). To change this, we need mentorship programs, incentives for female-led VC firms, and networking opportunities that empower more women to join and succeed in the VC space.
3. Reframe the Narrative Around Women Founders
   Women don’t need to “prove” they’re worthy of investment; the system needs to stop viewing them as less so. Female founders consistently demonstrate resilience and innovation. Investing in women isn’t a charitable act—it’s smart business.
4. Support Research and Data Transparency
   Empowering women with knowledge is key. Research, like Maddy Cross’ work on female partners in VC, sheds light on systemic issues and equips women with tools to navigate male-dominated spaces. Publicly available data on where VC dollars are going can also incentivise firms to improve their gender diversity.
5. Champion Ambition
   As Arlene Dickinson, Managing General Partner at District Ventures Capital, advises: Women should feel empowered to think big and act boldly. Embracing ambition, setting ambitious goals, and confidently executing on them can help shift perceptions and inspire change (Forbes, 2023).
6. Foster Networks of Support
   When women back women, it creates a ripple effect. Initiatives that connect female founders with female investors can create a supportive ecosystem where women are both investing in and uplifting one another.

The persistent gender gap in VC funding isn’t just a reflection of bias—it’s a missed opportunity for innovation and profit. Studies show that women-led companies deliver strong returns, yet they remain underfunded.

The solution requires more than DEI training or token efforts. It demands systemic change, accountability, and a shift in the narrative that positions investing in women as both the right and profitable thing to do.

As Dickinson reminds us:

• Think big and believe in your goals.
• Act boldly to turn your vision into reality.
• Stay true to your unique identity.

Change is overdue, but by fostering representation, accountability, and ambition, we can create a venture capital landscape where women receive the funding they deserve—and where innovation knows no gender.

Let’s Drive Change Together

At The Small Consultancy, we’re passionate about creating workplaces and ecosystems where everyone can thrive. By working with us, VC firms can move beyond surface-level DEI initiatives to implement actionable, impactful strategies that level the playing field for women.

Investing in women isn’t just good for business—it’s essential for a future where innovation knows no bounds. Let’s make it happen, together.