Venture capital funding is essential for many new businesses. However, companies with female founders in Colorado and elsewhere tend to receive much less funding than companies founded by men.
In 2016, companies with all-male founders received $58.2 billion from venture capitalists. In contrast, venture capitalists invested only $1.46 billion in companies helmed by women. The vast difference in the investment amount is on account of the differences in the quantity of deals and the average size of the deal based on gender.
For example, in 2016, 5,839 companies founded by men received funding from venture capitalists, while only 359 women-led companies received funding. Companies operated by women received 16 times less funding than companies operated by men. Companies that had both male and female founders also fared better than those founded solely by women with 1,067 being funded. Companies operated by women did see some improvements in 2016 as they accounted for 4.94 percent of all venture capital deals that year. The figure represents the highest percentage in the last 10 years.
However, with regard to the amount of venture capital dollars, women fell behind again, receiving only 2.19 percent of funding. The average deal for women-led companies was $4.5 million, while it was $10.9 million for men. In 2015, women-operated companies saw an average of $6.1 million, compared to $9.7 million for companies led by men. According to one expert, the lack of female venture capitalists is the reason women-founded businesses are not getting more money. Only 7 percent of partners at top venture capital firms are women.
Business owners may require the services of a business law attorney when handling venture capital matters. One thing that will be necessary is a well-drafted business plan, and an attorney can be of assistance in that regard.