Lessons from Backing Over 100 Female-Led Start-Ups
Where FF Are Building Today
By Nisha Dua and Claire Biernacki, BBG Ventures
In 2014, BBG Ventures was one of the first funds to back companies with at least one female founder. When we launched we heard all sorts of tropes, including our favorite: “We’d love to send you dealflow, but there just aren’t that many female founders.” LOL. Fast forward to 2022, with investments in over 100 female-led companies, we still hear some of the same stereotypes, including my favorites: “Women only start consumer companies” or “female founders are mostly building beauty and fashion companies.” Womp womp.
That’s a fairly pejorative view to have of female founders in an age when “conventional” start-up VC wisdom is that CPG doesn’t drive venture returns, start-up media constantly proclaims that D2C is dead, and B2C is often wrongly conflated with consumer goods. Having seen thousands of companies since we launched, we thought it was time to dig into the data. Are female founders really only building a certain type of consumer company, or are they in fact building a variety of companies that can scale and drive outsized returns?
To set the scene: at BBGV, we look at how consumer behaviors, preferences and attitudes are changing to identify large areas of opportunity for investment. But to us, the consumer takes many faces: purchaser, patient, employee, parent, etc — and solutions for consumers will be delivered through numerous business models, spanning both B2C and B2B, and enabling technologies.
Our take? D2C may well be dead but that doesn’t mean bad news for female founders — on the contrary, the data shows that female founders have long been going where the opportunity is and that they’re building valuable technology companies. We analyzed three datasets from Crunchbase for the time period 2014 to 2022: over 5600 female-founded companies which raised funding, 229 female-founded companies which have been acquired for over $100M and 95 female-founded companies which achieved unicorn status.
Here’s what we found about where female founders are building, and where they are creating value, today:
1. It’s true that many female founders were building in more traditional “consumer” arenas in 2014 — but the script has flipped clearly in 2022, with technology focused start-ups rising to the top.
- In 2014, the top 5 categories for female-founded companies that raised funding out of 354 companies were Commerce & Shopping (13%), Advertising (8%), Community & Lifestyle (8%), Consumer Goods (8%) and Biotech (7%).
- In 2022, none of those categories ranked in the top 5; out of 960 companies they were supplanted by Biotech (13%), Software (11%), AI (10%), Healthcare (9%) and Financial Services (7%). Though, three of the previous top 5 did rank in the top 8.
2. While FF are still building consumer start-ups, in the last 3 years, the overall number of technology or software start-ups have quickly outweighed traditional consumer start-ups.
Rather than looking just at 2014 versus 2022, we dug into what happened the years in between:
- 2014–2018 were big years for funding consumer goods and commerce & shopping start-ups (see chart below). This isn’t surprising: consider the rise of D2C and ecommerce start-ups; particularly the attention being received by the following start-ups hitting their stride between 2014–2016: Gilt had raised $286M by early 2015 and Warby Parker $215M, Harry’s raised a whopping total $384M by the middle of 2015, and Dollar Shave Club $160M by the end of the year; meanwhile Rent The Runway raised $176M and Birchbox $89M by the end of 2016. A wave of founders wanted to follow in the early success of these founders.
- However, in the last 4 years (since 2019), biotech, software, AI and healthcare emerged as the most prominent categories in which FF were building and raising. Biotech, Software and Healthcare outweighed consumer categories from 2020–2022. By 2021 and 2022, AI companies also outweighed consumer categories. We hypothesize that female founders (like any great founder) were driven by the opportunities presented by the overall shift in venture funding to these categories. For example, according to Crunchbase, funding in biotech was up 184% from 2016–2021, healthcare up >800%% from 2016–2021 and AI up >500% from 2016–2021. Some thoughts on where these founders have emerged from below.
3. Contrary to the stereotypes, female founders are driving outsized returns in technology and health focused companies.
- The top categories for acquisitions over $100M of companies led by female founders for the entire period between 2014–2022 were biotech (17%), healthcare (9%), and software (9%), followed by consumer goods (7%) and food & bev (6%). Notably, acquisitions in those traditional consumer categories peaked in 2017, but came down in 2020 and 2021; and acquisitions of healthcare and software have overall trended up over time — mirroring the data we’ve seen in companies receiving funding. The standout trend? In terms of number of acquisitions, female founders are driving significant volume in biotech and pharma. Many of these founders have come out of heavy research backgrounds with companies like Celgene and schools like UCal Berkeley, Stanford and Harvard in common. In terms of dollar value software and biotech were near equal, each driving 29% and 27% (a combined +$180B) of a total of $313B in value over the 8 year period.
- The top categories for female founded unicorns were healthcare (18%), software (16%) and AI (10%), followed by fintech (8%) and consumer goods (6%). (Of note: the landing of consumer goods in the Top 5 was primarily driven by the suite of companies who fundraised significant amounts up to 2015, some of which are mentioned above.) We see software and AI founders emerging from existing software companies, AI or adjacent industries such as fintech; for example, Automation Anywhere (raised $1.0B) co-founder Neeti Mehta came out of Letstalk.com and Intuit, Anthropic (raised $704M) co-founder Daniela Amodei from Stripe and Open AI, and Spring Health (raised $296M) co-founder April Koh came out of product while her co-founder, Adam Chekroud, came out of a research program at Yale. (Spring Health is a BBGV company.)
4. BBGV’s portfolio of over 100 female founded companies across three funds mirrors the market trends.
- Fund I (2014) and Fund II (2017) saw 75% of investments in B2C companies, with consumer products or commerce investments ~33% of investments. However, our newest fund, Fund III (2019) has only 40% B2C investments and 20% consumer goods or commerce investments. Conversely, B2B and B2B2C investments increased from 30% and 22% in Fund I and II respectively, to 60% in Fund III. SaaS/Enterprise represented 25% of Fund I and 13% of Fund II investments vs. 38% of Fund III investments. This reflects the shift we’ve seen in deal flow from female founders since we launched in 2014.
- The value drivers across funds by time similarly follow the trends described above: Almost 60% of Fund I MOIC is driven by CPG and commerce. Over 60% of Fund II MOIC is driven by healthcare/AI and software. Meanwhile, Fund III is early days, but 70% of returns are driven by media and healthcare with a touch of CPG thrown in as a follower for good measure. We expect this fund to ultimately be driven by healthcare, SaaS and AI.
- Finally, it’s worth noting that across all Funds, the MOIC from B2B and B2B2C is 130% more than the MOIC from B2C.
5. In sum, we still love what the consumer does — and the female founder does too. But the data is clear: they’re not just building in perceived “female” consumer arenas — they’re solving real world problems that can impact millions of users at scale. Those can be B2C companies, but they are increasingly B2B too — and they’re increasingly predominantly technology focused companies.
Consider founders like April Koh, the youngest female CEO to lead a unicorn at Spring Health, a former product manager, who experienced her own friction in finding mental health care and realized the best way to impact change at scale would be to deliver her AI solution via a B2B enterprise model to hundreds of thousands of employees all around America. Or Muriel Clauson who comes from a family of deskless workers and spent 6 years in the field to understand what the biggest issues were facing frontline workers to build Anthill, an AI-enabled internal comms platform that allows real-time, compliant communication between these workers and their employers. Meanwhile, Isabel Rafferty Zavala has developed CanelaTV, a new AVOD & streaming service built and curated for bicultural Hispanics, with over 22k hours of programming from +100 global content providers, reaching over 24M viewers this year.
Both the market data and BBGV’s portfolio are instructive: female founders clearly can’t be pigeonholed into a certain type of consumer company. They’re building and driving alpha in a diverse set of arenas — increasingly focused on healthcare and biotech, software and AI, fintech, not just commerce and consumer goods — and across varied business models.
So if you’re a female founder solving a real world problem that scales to serve millions of users via technology or a defensible innovation — whether it’s B2B, B2B2C, or B2C — come find us.