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The share of capital investment and rounds raised by women continues to see very slow progress. In 2023, just 7% of rounds raised were captured by all-women founding teams, up just two percentage points over the past five years. Similarly, just 18% of rounds raised this year to date were captured by companies with at least one woman founder or co-founder. This share has increased by only a single percentage point over a five-year period. This means that 75% of all rounds raised this year went to all-men founding teams.
In absolute terms, the numbers are even less positive. In 2023, all-women founding teams raised just 3% of all dollars invested in the year, with mixed gender founding teams taking 15%, leaving 82% of dollars to flow to founding teams that are all men. This number has increased by a single percentage point since 2019.
Share of capital raised (%) and share of rounds (%) by founding team gender composition, 2019 to 2023
The funnel of women and mixed founding teams is healthiest at pre-Seed stage, with 8% of funding going to women-led and 21% to mixed teams when looking at companies that raised funding between 2021 and 2023.
The equivalent shares start shrinking quickly when looking at the next stages of fundraising. The share of funding going to mixed gender teams is more resilient, bottoming out at 15% of all funding raised in the Series B and beyond stages, while women-only teams capture a mere 2.2%.
While there has been some minor progress compared to companies that raised the three years before, where woman-only teams captured only 1.7% of Series B-plus funding, it has been incredibly slow paced.
The small share of funding going to women-only teams is a clear sign that male and female founders are not held to the same expectations. Were both subject to equal opportunities, the share of funding by team gender mix would be more evenly distributed across all levels of company maturity.
Share of round count (%) and share of capital invested (%) by founding team gender composition, 2018 to 2023
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Notes:Data is as of 20 September 2023.
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Looking more specifically what the most burning business issues that women founders are grappling with are, a few key differences appear when comparing to all respondents.
The high concentration of women founders in Angel and pre-Seed funded companies where companies are still in the early stages of product development is also apparent from the responses given. Women founders are significantly less worried about managing burn rates (-4.4% and -4.8% compared to all respondents), instead focusing relatively more on converting customer intros (+2.3%).
What do you anticipate to be your company’s biggest commercial, operational, and financial challenges in the past 12 months?
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Notes:Founder and C-level respondents only.
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With its many ups and downs, working in the European tech ecosystem has left survey respondents with mixed reviews. Overall, roughly an equal part of respondents find that the European ecosystem providers equal opportunity to all (41%) compared to those who disagree (38%).
While white and non-white respondents are more aligned in their sentiment, the experience of women in European tech has the starkest contrast. More than half (55%) of women do not believe that European tech evaluates all on equal footing, as opposed to a third (31%) of the men responding the same.
In your opinion, does the European ecosystem provide equal opportunity to all, regardless of social, sexual or ethnic background?
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Notes:Numbers may not add up to 100 due to rounding.
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Diversification within teams allows for greater capacity to adapt. However to sustain and build upon this trajectory, continued targeted efforts must be made to further dismantle systemic biases and promote inclusivity.
Chairman, Black Seed
Increased accessibility to information has inspired many over the last decade to embark on ‘starting up’. Empowered by a culture of experience sharing, entrepreneurial awakenings are happening all over. This information evolution has contributed to a burgeoning diversity in seed-stage excellence. The transformative impact of COVID-19 has underscored a need for adaptability. Combined with a post George Floyd era, a paradigm shift has begun to take place. Under representation was collectively challenged, allowing for a greater endorsement of black talent in entrepreneurship, an increased focus on female representation within founding teams and a wider acknowledgment that diverse teams out perform their non diverse counterparts. Diversification within teams allows for greater capacity to adapt. However to sustain and build upon this trajectory, continued targeted efforts must be made to further dismantle systemic biases and promote inclusivity. The entrepreneurial ecosystem’s commitment to widening the funnel isn't just an ethical imperative but a strategic advantage for the entire startup landscape.
Gender diversity issues prevail also at the funding, or venture capital firm, level. When looking at the gender mix of General Partners (GPs), the most senior decision-makers in a venture firm, women make up a small minority.
Studies have shown that women VCs are more likely to allocate capital to women-led teams. Hence, an increase in women GPs might ultimately have a positive impact on the share of funding going to mixed and women-only founding teams.
GPs themselves do not shine in gender diversity
of GPs are female
Most respondents are aligned on their views on the attractiveness of working in European tech. The tough fundraising and macro environment has resulted in most respondents taking a more timid approach, with overall 28% of respondents stating that working in tech today is more attractive today compared to a year ago.
Yet, non-white founders stand out as most optimistic, with 34% stating they are more positive today. They are also the only respondent subgroup where positive respondents overweigh the negative (31% vs 34%).
How attractive do you think it is to work for a European tech company, specifically at the stage your startup is at now, compared to 12 months ago?
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Notes:Numbers may not add up to 100 due to rounding.
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The impact of the market reset is visible in founder sentiment when asked about the change in fundraising conditions over the past 12 months. 80% of founder respondents to the survey say that it has become harder to raise venture capital over the past year. Just 7% of respondents stated that conditions had eased.
It's worth noting that this year's responses suggest that fundraising conditions have deteriorated even further from what was already a challenging moment at the time of last year's survey, when 82% of founder respondents said that it had become more challenging to raise venture capital.
Looking at respondents from different demographics, underrepresented founders are having a relatively harder time. While the views of women and men founders are aligned, non-white founders report facing tougher barriers (87%) to fundraising compared to their white peers (79%).
In your opinion, is it easier or harder to raise external capital in Europe than it was 12 months ago?
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Notes:Founder, C-level, and Department head respondents only. Numbers may not add up to 100 due to rounding.
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In recent years, there has been a growing emphasis on investing in underrepresented founders within the venture capital ecosystem, highlighting diversity as not just a moral imperative but also a strategic business advantage.
CEO, Diversity VC
However, despite achieving record levels of investment in underrepresented founders in 2020, it remains a fraction of what is invested in white, cisgender men. Recent trends and discussions point to a troubling trend: a reduction in funding to these diverse groups, reflecting a persistent perception that they are riskier investments. Despite efforts to change these perceptions, the industry often reverts to traditional investment models during economic downturns. The Atomico First Look data report illustrates this setback, showing a decrease in the percentage of overall investment allocated to female founders compared to the previous year. This regression underscores a reluctance to embrace the undeniable economic wisdom that diversity in leadership leads to better business performance. We had hoped for a more solid transition from rhetoric to action, considering the long-term nature of venture capital investments. Unfortunately, the shift towards recognizing the tangible returns of diversity has been hampered by economic and political turbulence. This setback not only impedes progress but also fuels arguments from detractors who claim that diversity initiatives fail to deliver a return on investment or, worse, result in negative consequences due to flawed execution. This situation is particularly disheartening when we observe the widespread recognition of diversity's value in other sectors such as media, sports, entertainment, and financial services, where diversification is a well-established strategy. It is puzzling why the venture capital industry would deviate from this proven approach. The recent reduction in funding for diverse founders represents a regressive step that contradicts the well-documented benefits of diversity. It is crucial for the venture capital industry to resist the temptation to default to what may seem like 'safe' patterns and instead acknowledge the long-term value that diverse founders bring to the table.
Taking the leap into entrepreneurship is one of the bravest and most challenging choices one can make. Anybody starting a company, at any time, has to embrace a journey filled with risk, sacrifice, and personal challenges.
That's why it's essential to remove barriers to entrepreneurship in order to unlock latent talent that has the potential to succeed. To explore this, we asked survey respondents this year to share their perceptions of the greatest barriers for founders looking to start a company in Europe today.
The top responses are a lack of access to external financing (59%) and personal financial constraints (48%), followed by the uncertainty created by the macro backdrop (43%). This aligns with findings explored elsewhere in the report, that show that the market reset has led to a slowdown in the rate of new tech startup creation. Given the scale of financial barriers, entrepreneurship is a luxury for those that can afford to pursue it. It is little wonder that this leads to risk aversion being cited by many (32%) as a factor in blocking potential founders from starting a company.
As seen from the European tech flywheel, early success stories pave the way for the next ones and hence the importance of role models is not to be underestimated. Non-white founders in particular (+7ppt) miss the benefit of this mentorship. For both women and non-white founders, the lack of support network is another disproportionate barrier to entrepreneurship.
What are the main barriers for founders looking to start a company today?
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Notes:Founder and C-level respondents only.
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