Entrepreneurs

The Challenges for Female-Founded Startups During COVID-19

500 Startups is a global venture capital firm with a network of startup programs headquartered in Silicon Valley. The firm has invested in over 2,300 companies via its five global funds and 15 thematic funds dedicated to specific geographic markets and verticals. Its 100+ team members are located in 20 countries around the world in order to support the 500 Startups global portfolio of investments which spans more than 75 countries.

In a short period, COVID-19 has devastated the global economy, creating a surge in unemployment and financial hardship. Experts predict a record-breaking recession is on the horizon, and companies are fighting to adapt and survive. 

While all businesses are impacted in some way by COVID-19, not everyone is affected equally. At the best of times, female-founded companies receive one third less funding than their male-founded counterparts, and the global pandemic and recession are only likely to widen this gap. In 2019, only 2.8% of funding capital was awarded to female-led teams, despite women-owned businesses making up 42% of all companies in the US. 

Despite the odds, women-owned businesses have been making progress: funding for female-led startups increased by 10.6% to a record 3.3 billion from 2018 to 2019. Last year also saw the highest number of unicorns founded by women. This modest progress, however, could easily be lost as the burden of care and systemic biases are magnified in response to the current situation. 

To support female founders and mitigate the impact of COVID-19, 500 Startups, a leading global venture fund and seed accelerator, launched 500 Female Forces, a new initiative that aims to provide support to female founders around the world. A survey was distributed to 199 female founders to determine the specific challenges and struggles they face and the resources and support they require. 

The Impact of COVID-19 on Female Founders

A majority of the female founders who participated in the survey indicated that they currently have six months or less of runway. However, obtaining additional funding to keep their businesses operating looks challenging. While 56% said they continue to fundraise, 40% anticipate that they will need more time to meet their fundraising goals. Beyond the delayed fundraising timeline, two-thirds believe that they will be disproportionately affected by the crisis and receive less funding than anticipated.

In addition to finding funding and increasing runway, female founders cited customer acquisition and maintaining a healthy work-life balance as their top challenges. With more than 300 million sheltering at home in the US alone, work and home lives are overlapping more than ever before. The burden of care disproportionately falls to women, who do three times as much unpaid care work as men. Maintaining a business in these times is difficult enough, and one-third of respondents said they are doing so while taking care of family members at home has been very difficult or impossible to manage. To make it through this challenging time, female founders specified mentorship and connections with potential investors as some of the resources that they would find most helpful for their businesses.

By sharing these results, 500 Startups hopes to help the investment community-at-large understand what female founders are currently experiencing and build a supportive and inclusive startup community that will last beyond the Covid-19 crisis. Additional resources for female founders and funders can be found at femalefounders.500.co, and the full survey results are available here

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.