Only 5% of VC firms in funding deals have a majority female representation
Gender disparity revealed in AI venture capital funding
Female-founded companies account for under 3% of venture capital (VC) funding deals involving AI startups, according to a new report from the Alan Turing Institute for data, science and AI.
The report, Rebalancing Innovation: Women, AI and Venture Capital in the UK, found that between 2012 and 2022, 80% of total capital invested by VCs in AI was raised by all-male teams. In contrast, all-female teams raised just 0.3%.
When female-founded AI start-ups secured funding, they received on average six times less capital per deal than start-ups founded by male entrepreneurs. All-female teams raised £1.3 million per deal compared with an average of £8.6 million raised by all-male teams.
Men making funding decisions
The researchers also highlighted that most of the teams who make these funding decisions are men, only 5% of VC firms that participated in funding deals have an equal or majority representation of women at decision maker level.
Dr Erin Young, Research Fellow and Project Co-Lead at The Alan Turing Institute, said: "The stark figures in our report show the extent of gender inequality in venture capital funding.
"Making sure more female-founded AI companies receive investment is crucial for encouraging responsible AI and fostering innovation. One can only imagine what technical products and services might have been invented if women had equal participation in the VC and entrepreneurial ecosystem."
VC and technological innovation
Venture capital firms play a crucial role in technological innovation. They determine who and what gets funded, help shape growth trajectory, and influence the culture of a company.
The report outlines some key recommendations for addressing gender inequality in venture capital, including improving the recruitment and promotion processes at VC firms, fostering an inclusive culture, monitoring investment practices, and diversifying the ecosystem.
The research underlying the report used descriptive statistics to analyse data from 2012-22 sourced from Pitchbook, a financial data company whose database spans hundreds of thousands of private companies and is broken down by gender.