13 December 2022 |

Female Founders Struggle to Obtain Second Funding: Here’s Why.


This time last year, I asked Amy Nauiokas, Co-Founder and Co-CIO of venture capital firm Anthemis, if it was harder to achieve gender parity in the entertainment industry or financial services. 

Amy founded Anthemis in 2010, simultaneously with her media production company, Archer Gray, where her projects have been nominated for multiple Academy Awards (slay queen). 

She said entertainment and media are more of a hurdle because there’s a perception that women’s voices are heard, whereas, in financial services, the expectation was that there were no women. 

Of course, Amy and her companies are working to change perceptions in both industries today. But there’s a significant parallel between women filmmakers and women fintech founders

Both are less likely to receive a second opportunity after their first big break. In filmmaking, that means sitting in the director’s seat more than once. In fintech, that means the second round of funding. 

We know female fintech founders need help raising initial funds. But, unfortunately, that pesky 2% in venture capital funding stat has seemingly remained the same over the years (in Europe, it has been reduced to 1%). 

And new research confirms a trend I’ve heard through multiple interviews and honest conversations with founders and investors: women-founded businesses that received funding from female VCs are 2x less likely to raise additional funding.

What gives? 

These investments can lead to assumptions that the female entrepreneur received special treatment because of her gender. Her competency as a founder is questioned by the idea that she only received funding in the first place for being a woman. 


Yup. Research published in Organization Science by Kaisa Snellman and Isabelle Solal examined 2,136 startups tracked by the Crunchbase database. 

The researchers found that female-founded firms that received funding from female VCs had more difficulty getting financing in the future.

For male-founded firms, there was no difference. The male founders were equally likely to receive future funding regardless of whether their first-round funding came from male or female VCs.

Here’s how they found out. 

The researchers conducted an experiment in which MBA students evaluated identical business pitches with two exceptions: the gender of the founder and the financer

Results showed that female founders were rated less favorably when they had female VC support, suggesting a gender bias. 

Researchers concluded that observers implicitly believed that the relationship was motivated by considerations other than merit, leading to a discount in perceptions of competence.

The women were perceived to have received funding, not because it was well-deserved but because female VCs wanted to help out other women who would have needed help to secure financing elsewhere.

Now, let’s not discount women supporting women. It’s still a vital part of the solution. 

Women can benefit from female mentors in male-dominated professions, but research suggests when it comes to the capital, they may fare better with gender-diverse investment teams. 

This puts female entrepreneurs in a difficult position; if they rely solely on male funding, they are unlikely to receive any, and if they depend on females, they may not get future funding.

Luckily, the scholars present a solution. They propose that as the amount of female investors grows, gender will be less likely to be thought of as the motivating power behind decisions to invest in women. 

Currently, only about 12% of decision-makers at VC firms are women, so we need a lot more ladies to enter this area to produce this change.

Another solution is to have more female VCs keep financing women’s ventures, including the more considerable sums, as late-stage female backers take the flag from early-stage female financiers and supply female business owners with the necessary money. 

Increasing the representation of women in decision-making positions could lessen the impact of gender in social evaluations. 

However, the number of female investors, the positions they hold, the industries they invest in, and who they are connected to all factor into the success of this shift. 

Currently, female VCs are mainly involved in early-stage fundraising rounds with the highest risk, but if more women raised significant funds, this could change.

Which poses a bigger question: Is gender-segregated investment truly the goal?

It’s not. 

Instead, our industry should promote inclusive investing, where male and female investors are encouraged to join forces to support promising female entrepreneurs.

But in a real way, not some form of nefarious virtue signaling. Only together can we create systemic change. 

Ready to start? Here are 3 steps investors can take today to make their investment portfolio more diverse and innovative.

If you’re interested in learning more about Anthemis and Amy, you can do that here.

Remember, our impatience with the status quo is fueled by optimism that progress is always possible. Firms like Anthemis are a testament to that.

(P.S. this is a trend I’ll continue to investigate in future articles – stay tuned).