Despite navigating a difficult fundraising environment, Europe’s female founders and fund managers are forging a path forward, securing record investments and demonstrating resilience in 2023. This is according to the “State of Gender Diversity in European Venture 2024” report released by Female Foundry, a network of investors and female founders across Europe.
What is Female Foundry?
Female Foundry was founded in 2020 in London by Agata Nowicka, a two-time entrepreneur and an investor. Today, Female Foundry is a network of 6,000 investors and female founders across Europe.
Agata Nowicka, CEO of Female Foundry and creator of the State of Gender Diversity in
European Venture report said, “Despite the challenging macro fundraising climate, female entrepreneurs and emerging fund managers in Europe continue to build and innovate. The 2024 Female Foundry State of Gender Diversity in European Venture Report clearly demonstrates not just the resilience of female entrepreneurs and investors, but also highlights the significance of the untapped potential for innovation driven by these women, which is crucial for Europe’s future. Challenging times serve as fertile ground for innovation, and so, it could not be a better time for investors to step up and meet the ambitions of female founders and fund managers who are at the forefront of new business creation in Europe.”
Agata told TFN, “The Venture Capital industry is influenced by evolving trends in technology and societal preferences, which I believe plays a crucial role in determining the likelihood of securing venture capital funding. This dynamic means that industries that are at the forefront of innovation and those that have the highest chance of relatively fast returns, are more likely to attract VC interest. Consequently, startups operating within these sectors often stand a better chance of obtaining funding, as they are perceived to be in sync with the direction in which the market and society are headed.”
Breaking records and raising bigger rounds
2023 was a banner year for European startups with a female co-founder. These companies secured a staggering €5.9 billion in funding, marking the third highest annual tally ever and solidifying the upward trend seen in recent years. This impressive number represents an 11% share of total venture capital deployed in Europe, a 1% increase from 2022 despite the headwinds faced by the entire industry.
Even more encouraging is the trend of female entrepreneurs raising larger rounds. The average Series C round size for female-founded companies jumped 45% to €80 million in 2023, while Series A rounds averaged €11 million, a 38% increase. This signals a growing confidence in female-led businesses and their ability to scale.
Mega-rounds, unicorns, and increased investor attention
2023 saw further milestones for female founders. Four companies secured mega-rounds (€100 million or more), and one even achieved unicorn status, joining the coveted ranks of billion-dollar startups. These achievements showcase the potential and ambition of female-led ventures, attracting the attention of investors around the world.
Indeed, investor perception appears to be shifting. The report reveals that 70% of surveyed VC investors now track female founders in their deal flow, and 40% actively seek investment opportunities in companies led by women. This increased attention bodes well for the future of female entrepreneurship in Europe.
Science-minded founders and a rise in female fund managers
An interesting trend emerges when looking at the educational backgrounds of the most successful female founders in 2023. The “50 Top Rounds List” reveals that all female entrepreneurs on the list hold university degrees, with a staggering 90% having Master’s or Bachelor’s degrees, particularly in science fields. This suggests that strong educational credentials and expertise in STEM fields are increasingly playing a role in the success of female-led businesses.
On the fund manager side, 2023 also saw positive developments. Female General Partners (GPs) raised €4.4 billion, a 76% increase compared to the previous year (excluding a 2022 outlier). Additionally, a remarkable 26 new female-led funds were announced, marking a 73% jump from 2022. Notably, 12 of these new funds were launched by first-time female fund managers, demonstrating a pipeline of fresh talent entering the venture capital space.
Challenges remain, but optimism abounds
While the report highlights significant progress, it also acknowledges persistent challenges. Geographical concentration remains an issue, with 70% of new female-led funds being established in the UK, France, Spain, and Germany. Additionally, the wider funding gap persists, with only 2% of funding going to female-only teams and 10% to female emerging fund managers.
Our take on Female Foundry
Despite these challenges, the overall tone of the report is one of cautious optimism. The growing confidence in backing female founders, larger funding rounds, increased investor attention, and a rise in female fund managers all point towards a more inclusive and promising future for women entrepreneurs and investors in Europe. Female Foundry’s inaugural report paints a dynamic picture of the venture capital landscape in Europe, highlighting the achievements of female founders and fund managers while acknowledging the areas where progress is still needed. As the ecosystem continues to evolve, one thing is clear: the future of European venture capital will be increasingly shaped by the contributions of talented and resilient women.
