Seattle-based Female Founders Alliance released a new report on Thursday that measures the effect of the pandemic on women and non-binary individuals and what the prolonged health and economic crisis is doing to their entrepreneurial aspirations.
While women-founded companies have been historically left behind when it comes to venture funding— at less than 3% of all venture capital invested, according to FFA — the pandemic has made matters worse. Venture funding for female founders hit its lowest quarterly total in three years, Pitchbook previously reported.
In September, Female Founders Alliance surveyed a diverse group of 150 professional women and non-binary individuals across tech hubs with high likelihood of wanting to start a company, including 38% people of color and 5% who use they/them pronouns. Before the pandemic, 87% were somewhat or highly likely to start a company. Six months later, 51% of them have delayed or scrapped these plans, while 16% accelerated them, starting a company before they were planning to.
“The big takeaway for me is that the pandemic exacerbated existing structural problems,” Leslie Feinzaig, founder and CEO of the FFA, told GeekWire. “It made it much harder for people who had it hardest to begin with — people without substantial wealth or savings, and moms of young kids without reliable childcare. The picture I see isn’t a reduced pipeline — it’s a more privileged pipeline, and that most likely means a less intersectional one.”
Here are some highlights from the report:
- Effect on women’s lives and careers: The percentage of respondents employed full time decreased by nearly 15%; 13% of respondents lost their job due to layoffs; 5% got sick or had someone in their household get sick with COVID-19.
- Those most affected are moms with young children: 49% of respondents care for babies, toddlers or kids under 18; a fifth lost all or most of their childcare; 70% of those with school-aged children are now responsible for remote
- Most women (51%) are now less likely to become entrepreneurs: The most common reason was financial security, including the need for a steady paycheck, and the lack of funding for women entrepreneurs.
FFA says the net effect of those who postponed and those who accelerated their startup plans won’t be known until macroeconomic data is released detailing new company formation in 2020.
“But the picture emerging right now is not one of a stalled pipeline of women and non-binary founded companies,” Feinzaig wrote on the FFA website. “Rather it’s one of accentuated privilege, where those who can afford to live without a paycheck are the ones most likely to become entrepreneurs. It makes entrepreneurship even less accessible.”
Those with the opportunity and bandwidth to launch a company — even in the past six months — are out fundraising right now, according to Feinzaig. That’s in addition to hundreds of women-founded companies in the Seattle region who have been around, are still bootstrapping, and are still looking for investor dollars.
“And then there’s the high-potential people working gigs, startup and corporate jobs who would make amazing founders,” she told GeekWire. “We need to encourage them, normalize it, and make it possible for them to succeed. We need more investors making bets at the earliest stages.”
FFA initially started as a private Facebook group of women who wanted to help support female founders and entrepreneurs. It now has a community of more than 20,000 founders, investors, partners, and supporters across North America since launching in 2017. FFA has also inked partnerships with groups such as Microsoft for Startups and Bellevue, Wash.-based venture capital firm Trilogy Equity Partners. It hosted its third annual Champion Awards event in August.