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Only 7% of US climate tech venture capital funding went to female founders in 2023

VC investment for female founders dropped in 2023.

Businessman and businesswoman standing on money stack.

Graphic via Shutterstock/ Frogella

In 2023, 21 out of 319 climate tech funding rounds in the U.S. went to female-founded companies, according to data from Pitchbook. That’s 6.6 percent of deals.

Globally, the odds weren’t any better, with female founders closing just 58 funding deals, compared to the 826 rounds awarded to male founders in climate tech. 

"Female founder" refers to a female-presenting person acting as the sole founder of a company. This title is newer than I realized; until the passage of HR 5050, the Women’s Business Ownership Act in 1988, a woman was required to have a male relative cosign for business loans in many states.

Crunchbase’s data about gender-related funding trends skews slightly better than the Pitchbook figures: its tracking showed that 65 U.S.-based, female-founded climate tech companies received VC funding in 2023, or 10 percent of all funding rounds. Those deals included seawall construction company Kind Design’s $5 million seed round and environmental data venture Amini’s $4 million seed round.

The same database shows 565 male-founded climate tech startups received funding in the same period. 

The disparity between Pitchbook’s and Crunchbase’s data likely results from the way each researcher defines climate tech. Either way, 2023’s number is a step backward. Pitchbook’s data states that female founders raised $106 million in 2022, compared to 2023’s $80 million. The entire sector experienced a dip in VC funding in 2023, likely contributing to the fall of female-founded investing.

The cause for the great funding divide

Why does the gender divide exist, when the need for climate tech is greater than ever? Put simply, the world of venture capital is dominated by men, and historically men have invested in other men rather than women.

Women make up only 11 percent of partners at venture capital firms, according to "Advancing Gender Equality in Venture Capital," a report from the Women and Public Policy Program at Harvard’s Kennedy School.

Historically, VCs have tended to fund startups with all-male management teams. "Fewer than 5 percent of all VC-funded firms have women on their executive teams, and only 2.7 percent had a female CEO," according to an analysis by the Center for Strategic and International Studies, a bipartisan think tank.

"There’s no shortage of awesome women who can and should start companies," said Veery Maxwell, co-head of venture and growth at Galvanize Climate Solutions, a climate-focused venture capital firm, to GreenBiz last year, "but often they don’t want to make the leap because they don’t think they’ll be able to raise the money." 

One good reason to bridge the gap

Female-founded companies generate twice as much revenue per dollar invested than male-founded companies, according to a Boston Consulting Group study of five years of data. Every dollar of funding invested in female-founded companies generated 78 cents, compared to the 31 cents generated by male-founded companies, the study found.

Similarly, in 2022, a Pitchbook study found that female-founded startups have a 12-year streak of exiting faster than male-founded ones — an average of 7.2 years to 8.1, respectively.

Know of a female-founded climate startup that has bucked the trend? Share your feedback to [email protected]

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