Opinion: Female founders are not uninvestable: I can bust the myths that are holding them back

Recently, I spoke with a woman founder who is scaling her third startup. Despite her impressive track record, having already built two successful impact-focused businesses, she is seriously considering hiring a white male co-founder to represent her latest product.

This decision isn’t about taking the easy route; it’s a pragmatic choice born from years of navigating an ecosystem that has made it clear this may be her fastest path to scale.

As someone who has been running an entrepreneur support programme for women founders over the past three years, stories like hers no longer surprise me. But they still anger me.

The narrative shouldn’t be that women founders ‘only’ raised 5% of capital, but that investors allocated 95% of their capital to men

The dismal funding landscape for women founders in Europe is nothing new. Data from the global data platform, Dealroom, consistently shows that less than 10% of venture capital goes to startups founded or co-founded by women, with a paltry 2% allocated to all-female teams. Despite over a decade of data sharing, women-focused funds, ecosystem events, and tailored support programs, the funding needle remains stubbornly stuck.

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There’s no shortage of assumptions about why women founders struggle to secure funding: a weak pipeline, an overrepresentation in fashion and beauty industries, or a lack of focus on growth. To test these theories, our team at Village Capital – a nonprofit known for its groundbreaking approaches to supporting founders who are building solutions to emergent social, economic and environmental challenges – collected data from 200 women-led startups in Europe during our three-year accelerator programme. The results debunked these myths:

Myth 1: Investors are not funding women-led startups because of a weak pipeline.

Reality: We identified 2,035 women-led sustainability companies, proving a robust and untapped pipeline exists.

Myth 2: Women-led startups are concentrated in Western Europe.

Reality: Our participants hailed from 25 European countries, representing 50 nationalities and underscoring a pan-European talent pool.

Myth 3: Women founders primarily operate in traditional “female” industries like fashion and beauty, creating marketplaces and B2C products.

Reality: While our programme focused on green technologies, the data showed our portfolio spanned all climate and sustainability sectors, impacting every single one of the SDGs. Regarding product type, 52% of startups focused on software, 42% on hardware, and 6% combined both. Nearly half of our companies were developing hardware products – far above the industry average of 10%.

Myth 4: Women-led startups lack growth potential and are not as investable as their male-led counterparts.

Reality: The 200 companies graduating from our programme achieved an 83% increase in funds raised, 96% growth in revenue, and a 46% increase in full-time employees. They also boasted a 94.5% survival rate, far exceeding the industry average of 70%.

Women founders are undervalued and under-allocated

If these assumptions don’t hold, where does the real issue lie? As the data illustrates, the problem isn’t that women founders are not investable, but that the current investment process is systematically undervaluing and under-allocating them.

In a conversation I had with Laurie Felker Jones, founder and managing director of mission-driven business consultancy Modern Tender, she aptly said: “The narrative shouldn’t be that women founders ‘only’ raised 5% of capital,” but rather that, “Investors allocated 95% of their capital to men.”

The systemic bias against women in the startup ecosystem is well-documented. Investors are less likely to fund women for several reasons. First, as Village Capital research into the gender financing gap has highlighted, they often ask women risk-related questions while focusing on growth-related potential when speaking to male founders. Second, they rely heavily on male-dominated networks for the coveted “warm introductions”. Third, the pattern-matching methodology – where investors replicate past successes, which have traditionally featured male founders – further entrenches inequality. Lastly, investors’ tendency to invest in people similar to themselves, perpetuates the problem. 

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Addressing these systemic issues will require intentional action, and it needs to happen fast. Overlooking women-led startups isn’t just a missed investment opportunity for investors; it’s a missed opportunity for game-changing solutions that benefit both people and the planet.

Marta Zaccagnini is senior programme manager for Europe at Village Capital, which supports social and environmental entrepreneurs

Header photo: Freepik