VCs Fund More Early-Stage Female Founders in SoCal than Rest of US, Finds New Report

On October 28, 2020, dot.LA reported that women entrepreneurs in Southern California are more likely to receive early-stage funding from the nation's top 100 VC firms than if they live elsewhere, according to an exclusive new look at a report on U.S. VC investment in diverse founders.

The report, conducted by RateMyInvestor in partnership with Diversity VC, was previewed at the dot.LA virtual Summit. It looked at investments under $100 million made by the nation's 100 most active VC firms by deal numbers during 2018 and 2019. It also accounted for the "perceived" race and gender of founders, said Bennett Quintard, co-founder and COO of RateMyInvestor.

The survey fills a glaring gap in official data around the racial makeup of companies receiving VC-backed investment. Earlier in the week, dot.LA reported that VC investment in all-female founded companies in L.A. dropped 70% in the third quarter compared to last year, while all male founded companies saw a 385% bump, according to an analysis of PitchBook data. But PitchBook does not track data around race.

Of the total capital invested nationally, about 5.5% went to 429 founders and 187 startups in Southern California.

The report found 84% of capital in the U.S. went to male founders. But in L.A., female founders fared better. The percentage of all-female teams that received funding is almost twice as high as it is nationally. Female and mixed-gender teams were likely to receive larger seed and Series A checks than the national average, and mixed-gender teams tended to raise more money than single-gender teams.

Women who received capital were more likely to have an Ivy League education than men — 20% versus 12.75%. And everyone was more likely to be white. Of the 429 L.A. founders, only two were LatinX and nine Black.

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