Young female founder rise across Europe - but funding gap remains

The number of young female entrepreneurs launching start-ups across Europe is rising, yet companies led by women continue to raise significantly less venture capital than those led by men, according to a study by Invest Europe and the European Investment Fund (EIF).

The report, The VC Factor - Skills Edition, analyses the backgrounds of thousands of European founders and investors and highlights a persistent gender imbalance in venture capital funding. Across more than 3,600 early-stage start-ups examined between 2011 and 2021, male-dominated founding teams raised on average 79% more venture capital than teams with a balanced or female-majority composition.

Even after accounting for factors such as education, university prestige, sector and geography, start-ups led mainly by women still secured around €700,000 less per investment round than their male-led counterparts

This disparity cannot be explained by differences in qualifications. On average, female founders in the study were more highly educated and more likely to have attended prestigious universities than their male peers.

Structural factors account for part of the gap. Male-led teams tend to be larger, receive their first investments earlier and are more frequently located in regions where venture capital activity is strongest. However, a significant share of the funding difference remains unexplained by measurable factors, suggesting that elements such as networks, entrepreneurial experience or investor perceptions may also play a role.

Despite the gap, the report notes encouraging signs. Female participation in the start-up ecosystem is gradually increasing among younger generations, pointing to the potential for a more balanced venture capital landscape in the future.

Read the full report here.