Women are the most underfunded category in VC - where the largest opportunities lie
What investor data reveals about capital misallocation and gender
Capital is consistently misallocated
Women-led startups continue to receive a disproportionately small share of global venture capital. Despite years of research, initiatives and public commitments, the numbers have not changed.
In 2025, all-female founding teams accounted for 5.6% of global VC deals, yet received just 1.4% of total VC funding. This gap between participation and capital allocation is not new. Data shows it has remained broadly unchanged since 2018, including during peak funding years.
Share of global VC funding by founder gender
Source: Pitchbook, data as of 16 December 2025
This matters because deal participation reflects intent and activity and capital allocation reflects conviction. The persistent spread between the two suggests the issue is not who is building companies, but how capital is being distributed once those companies exist. It’s a systematic allocation failure.
Women are underpriced at entry
The inefficiency doesn’t stop at cheque size – it shows up at valuation.
All-female-founded companies enter the market at materially lower valuations than both all-male and mixed-gender teams. Additionally, while entry valuations have increased across all founder types over time, the year-on-year valuation growth for female-only teams has consistently lagged behind their peers.
Median growth in VC round valuations across founder gender types (2021-25)
Source: Pitchbook, data as of 16 December 2025
Lower entry pricing has its long-term consequences. It reduces ownership retention, weakens follow-on leverage, and constrains upside – even when performance is comparable. Women-led companies are not only underfunded, but under-valued from the outset.
Yet, the outcomes tell a different story
Despite receiving a fraction of capital, women-led companies consistently punch above their weight at exit. In 2025, all-female-founded companies accounted for 6.2% of global VC exit value, despite receiving just a fraction of VC funding. In simple terms, women-led startups generated liquidity at exits at more than four times their share of capital.
Women-founded companies can return 2x more revenue per dollar invested, a pattern that shows up most clearly across sectors. Across cycles, the pattern emerges: less $ capital in, disproportionate $ value out. That points to stronger capital discipline and raises a hard question for capital allocators. If outcomes consistently exceed allocation, what is being priced in?
Time and time again, bias shapes capital decisions
If outcomes consistently outperform allocation, the gap cannot be explained by performance alone. Studying this, research shows that women founders face a materially different fundraising experience. In meetings, investors tend to ask women more risk-focused, closed-ended questions – about downside, loss prevention and failure. Men, by contrast, are more often asked growth-oriented, promotional questions that invite ambition and upside.
Yale SOM research highlights the issue more starkly. Investors apply what’s known as “one-way updating”: a single poor outcome from one woman-led startup reduces the likelihood of backing other women founders by a further 8%, while positive outcomes do not increase future investment appetite. Failure is individualised only for men.
This isn’t necessarily a conscious decision by most investors, but at scale, it creates a measurable distortion in how capital is allocated.
Emerging markets further magnify this trend
These inefficiencies become more pronounced in emerging markets. Seedstars reports that only around 11% of seed capital in emerging markets goes to companies with a woman in the founding team, and female-led ventures raise, $1m less than male-led peers on average.
Capital is scarcer, investor networks are tighter, and decision-making is often more concentrated. When access is limited, pattern-matching plays a larger role – and deviation from the “default” founder profile carries a higher perceived risk. And no doubt, gender compounds that effect.
This matters because emerging markets now account for a larger share of global GDP than advanced economies, yet continue to capture a disproportionately small share of global VC funding. When women are under-allocated capital within already constrained ecosystems, this is amplified.
Global VC funding by region for all female founders (2018-2025)
Source: Pitchbook, data as of 16 December 2025
What actually changes outcomes and what we see in practice
Across multiple years of working closely with founders, one pattern is consistent: capital alone is rarely the constraint.
We see this every year inside the Aurora pipeline. Solape Akinpelu, Aurora Tech Award Winner 2025, built HerVest, a fintech platform expanding access to savings, impact investing and credit for women across Africa. In healthcare, Folake Owodunni, Aurora Tech Award Winner 2024, founded Emergency Response Africa after witnessing the stark contrast between emergency care in Canada and Nigeria. Starting with just over $100k in initial capital, ERA now serves 43,000+ clients and operates in a system responsible for over 1.2 million preventable deaths each year.
These examples illustrate what happens when founders are evaluated on substance and supported with access. What consistently changes outcomes is visibility, ecosystem access, and credibility.
Taken together, the data tells a clear story. Women are under-allocated capital, under-priced at entry, and yet over-deliver on outcomes. That combination points to a persistent market inefficiency - not a lack of talent, ambition or performance.
At inDrive, we work closely with founders across emerging markets and continue to track this space carefully to combat this misallocation. If you’re a founder building in this space, or an interested operator or investor, please do get in touch with us.
The gap is clear and so is the upside.
