Women-Led Firms Prove Bright Spot Amid 2023 Fundraising Slump Challenges

The venture fundraising landscape has been experiencing a slowdown since the middle of last year. Larger firms are cutting their targets, and emerging managers are struggling to secure funds. However, this trend doesn’t apply to all firms. In fact, many women-led funds have seen significant success in 2023.

Women-Led Funds Shining in a Slower Market

While it’s difficult to determine whether women-led firms are truly outperforming their male counterparts, several notable fundraising rounds have caught attention. In January, Monique Woodard closed a $17 million debut fund at Cake Ventures. Adverb Ventures, co-founded by April Underwood and Jessica Verrilli, secured $75 million in July. Supply Change Capital, led by Noramay Cadena and Shayna Harris, raised $40 million last month.

Multiple Women-Led Firms Launch Funds and Seek Fundraising

In addition to these notable rounds, several women-led firms have launched funds or are currently fundraising. These include Public Ventures and Oversubscribed Ventures. It’s worth noting that the median fund size in 2023 is $13 million, according to PitchBook data.

Why Women-Led Firms Are Thriving

Kyle Stanford, a senior venture capital analyst at PitchBook, suggests that the increased visibility of women-led funds may be due to optics in this slower market. "It’s probably standing out because there are only so many funds being raised, and there aren’t 10 funds being closed every day," he said.

However, Kari Harris, a member and chair of the fund formation practice at Mintz law firm, believes that the success of women-led firms is more than just an optical illusion. "The pressure on LPs in recent years to back more funds run by women and people of color has created a unique opportunity for these managers," she said.

LPs Looking for Differentiation

In today’s market, LPs are seeking firms that differentiate themselves from the rest. Many women-led funds offer a unique perspective and approach that sets them apart. "What they have to offer is just too good for LPs to ignore," Harris added.

Foundations Laid for Future Success

The growing number of women founding startups, being backed by LPs, and founding women-led firms lays the foundation for future success. This trend indicates a shift towards greater diversity and inclusion in the venture capital industry.

Conclusion

While the venture fundraising landscape may be experiencing a slowdown, women-led funds are shining bright. Their success is not just due to optics but rather their unique perspective and approach. As the industry continues to evolve, it’s essential to recognize the value that these managers bring to the table.

Topics:

• Market Analysis
• Venture Capital
• Fundraising
• Investing
• North America
• Startups
• United States

Author:

• Rebecca Szkutak, Senior Reporter, Venture
• Becca is a senior writer at TechCrunch that covers venture capital trends and startups. She previously covered the same beat for Forbes and the Venture Capital Journal.