Neil here.

Startups around the world raised a total of $300 billion in venture capital funding in 2020, up 4% from the year before, despite the global pandemic.

With those numbers, it’s safe to say venture capital boomed last year. But looking across all of the data, that boom paints a stark image of ongoing disparities in the startup funding cycle.

With International Women’s Day coming up on Monday, I wanted to take some time to dig into this issue. It’s an important one, and it’s a chronic problem that’s faced all corners of the startup world since the very beginning.

Last year, global female-founded startups received $4.9 billion in venture capital funding.

In 2020, female-founded startups around the world received just 2.3% of total venture capital investments. The year before, that number hit 2.8%… a concerningly low number that was still an all-time high for venture capital investments in women-led startups.

Let’s zoom in even closer. Startups led by Black and Latinx women receive only a sliver of the funding available across the board. Between 2018 and 2019, these founders received only 0.64% of VC investments.

But here’s the thing. Companies with greater diversity tend to perform better. A 2020 study by Catalyst, for example, found that companies with women in 20% or more of their management roles generated more than 2% greater returns on investment than companies who didn’t.

So, why the disparity? It’s part of a larger theme that’s come to the forefront during the pandemic… that women have suffered the brunt of economic consequences as a result of the COVID-19 fallout.

Since February 2020, over 2.5 million women have left the workforce. Additionally, women held a disproportionate number of the jobs lost throughout the pandemic (55%), and about half of the women-held jobs lost in the first two months of the pandemic are still gone, according to a report from Robinhood.

It’s a troubling reality, and it begs an important question:

In our corner of the startup world, how can we work to support more companies led by women and other groups that are often left out of the system?

When I’m looking for companies to add to my own portfolio, of course I’m going to follow my investing thesis. There are 10 characteristics that I look for in every single startup, and each one of those characteristics is important in building out a solid portfolio.

However, there are endless numbers of founders out there who’ve never even had a chance to come to the table. Startups led by women, people of color, and LGBTQ+ folks receive staggeringly low amounts of capital, despite having some of the biggest and best ideas on the market.

One of my goals in launching this community was to bridge that gap. Not only do I want to bring you closer to the companies I believe can set you up for incredible returns down the line… I want to give founders from all backgrounds and identities a platform to showcase their ideas.

Since our founding over a year and a half ago, we’ve done just that. We’ve featured women-led startups like…

  • A company led by one of the Top 36 Most Creative Women, as awarded by Business Insider…
  • An edtech company led by the first Latinx CEO to max out a $1.07 million crowdfunding raise…
  • And a software company led by one of INC magazine’s Top 100 Female Founders. (Her company is one of two that I’ve just added to my own portfolio. Check out the details on both here.)

Opening these doors wider will benefit all of us, and I believe we have a responsibility to do so as soon as possible. It’s an ongoing process, and we still have so much to learn and so much progress to make.

But this International Women’s Day, I want to make it clear that fostering this type of inclusion and creating space at the table for entrepreneurs and investors from all backgrounds and walks of life is what will solve our world’s most critical unmet needs.

Right now, for example, I’m eyeing a women-led company that’s creating one of the next biggest inventions in software and facial recognition technology. It’s been reviewed by the research team and they have given the company a thumbs up.

I just invested my own money into it, and anyone can invest at the exact same terms as I did. If you’re interested in learning more, you can check out all the details here.

I’ll be back soon with another update.

Until next time,

Neil Patel