Female founders face a funding gap; what Universities can do about it

A decade after Aileen Lee introduced the term “unicorn,” only 14% of these billion-dollar startups have a female co-founder—a modest rise from just 5% in 2013.

As Lee aptly noted, there are more unicorn CEOs named Michael, David, or Andrew than there are women.

This isn’t a lack of talent—it’s a systemic issue in how venture capital flows.

Capital flows do not favor women

At every stage of the venture pipeline, women are left behind.

Female-founded startups received only 2% of global VC funding in 2023, down from 2.5% in 2013. In the UK and Europe, this figure has stagnated. Even startups with at least one female co-founder fared slightly better, securing 27.8% of funding last year—but much of this number is skewed by high-profile exceptions like OpenAI.

The disparity boils down to bias in capital allocation. With 85% of VC decision-makers being male, funding tends to flow towards founders who mirror their experience or style. Women founders are often subject to more scrutiny, such as being asked to justify their technical credentials or offer more conservative projections in pitches.

More conservative projections play poorly into the power law dynamics that VC is built on. Female founders, who statistically offer more grounded projections, are often overlooked.

Data from university-affiliated founders

Universities are essential development grounds for entrepreneurial talent, but their ecosystems also reflect these disparities.

I’ve been playing with Tracxn data (see accompanying graph), founding teams with an Oxford affiliation are 18.45% likely to include a female member—similar to Stanford (18.42%) but lagging behind Cambridge (20.32%), Imperial (19.1%), LSE (22.5%), and UCL (22.6%).

At the high end, UCL leads with 22.62%, while MIT, LBS and INSEAD trail at ~17%.

We need to see more University-led initiatives supporting female founders. And we need to see more student-led initiatives supporting female founders like this one.

Things that help

1. Broaden the funding funnel: the bias in VC decision-making needs to be addressed at the source. Initiatives like the UK’s Investing in Women Code aim to increase transparency and accountability by requiring signatories to track female founder funding metrics. However, only two LPs had signed up by April 2024. The VC ecosystem needs more buy-in from investors to make systemic change.

2. Support female founders beyond capital: female founders often face a confidence gap, fueled by repeated biases in fundraising. Universities and accelerators can step in with tailored mentorship, pitch coaching, and access to funding networks. Such efforts can help women founders navigate a system stacked against them. That said, “coaching, pitch sessions and workshops for female founders are all important — but plenty of women-led startups don’t need any mentoring, they just need the money.”

3. Support diversity on capital allocator side, and also build dedicated female-focused funds: does tipping the scales towards equity require funding designed with women in mind? Germany’s KfW Capital is injecting €200M into emerging VC managers—especially those led by women and gender-diverse teams. With just 15% of European VC partners being female, this initiative could unlock more funding for female founders, though skeptics call for bigger commitments. The UK should consider similar efforts to make the venture ecosystem more inclusive.

Beyond these structural efforts, Universities can also play a role by supporting student-led initiatives and developing programs of their own to support female founders.

University ecosystems as catalysts

Universities can play an important role in closing the gender gap in the UK.

The data is clear: supporting female founders isn’t just the right thing to do—it’s a smart investment. Female-led startups generate higher revenue per dollar invested, exit faster, and burn less cash than male-led counterparts. Yet they remain underfunded.

If the UK’s Golden Triangle—Oxford, Cambridge, and London—is to live up to its reputation as a global innovation hub, it needs to address these disparities head-on.

The UK’s universities need to support initiatives like this one.

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