Please invest in us… A frustrating situation for female entrepreneurs

Startups focused on deep tech
Harsh ‘investment cold wave’ for female entrepreneurs

Women’s representative company attracts 23 billion won in the first quarter
Only 2% of total investment amount
Series B and above account for only 8%.

Impact of slowing growth in fashion, content, etc.

Startups founded by female founders are facing the cold wind of the investment cold weather. It is analyzed that this is due to the relatively slow growth of the content and commerce sectors, where many women enter, due to investment being focused on technology areas such as artificial intelligence (AI).

According to an analysis of venture investments in the first quarter of this year by Startup Recipe, a startup information company, on the 24th, the total amount of investment attracted by companies headed by women was 23.05 billion won. This is approximately 2% of the total investment amount during this period. There was no mid- to late-stage investment, and all of it was early-stage (Series A or lower) investment. AlgoCare (KRW 15 billion) was the only company that received more than KRW 10 billion in investment.

Analysis suggests that major female startups are failing to advance to the growth stage or are having difficulty raising funds even if they have entered the later stage. In 2021, the proportion of mid- to late-stage (Series B or higher) investment among all female startup investments was 17.8%. However, it shrank to 8.5% in 2022 and 7.9% in 2023. Startup Recipe said, “After the investment crunch began, it has become difficult to find female startups that have passed Series B,” and “there has been no news of follow-up investments in promising startups such as Jiguin Company, Living Research Institute, and Publy for 1-2 years.” did.

As the concentration of investment in technology fields such as AI is intensifying, female startups, which have relatively few startups in this field, are no longer able to increase the size of their companies. Startup Alliance analyzed venture investments in the first quarter and found that funds were concentrated in AI, manufacturing, and healthcare. A Startup Alliance official said, “Manufacturing-based technology companies have received significant investment.”

On the other hand, female startups are focused on fashion, content, and commerce. As a result of analyzing the industries of the top 100 female startups based on cumulative investment, the fashion and beauty sector ranked the largest (17). This was followed by 13 content/social sites, 11 e-commerce sites, and 10 food sites. These are the industries that have been relatively more severely affected by the cold weather.

Some analyzes say that female startups have been hit harder as venture capital (VC) companies have become more cautious in their investment decisions. Of the 1,597 domestic investment review personnel, only 236 (14.8%) are women. Only 8 out of 216 VCs (3.7%) are headed by women. Pitchbook pointed out, “Investment companies ask female founders about ‘risk’ factors and male founders about ‘growth’ factors.”

There are also voices calling for women to more actively develop technological capabilities and start related startups. The proportion of female students in the top 10 universities in Korea is 50%, but only 21% of female students major in the STEM (Science, Technology, Engineering, and Mathematics) field. Lee Hyun-seung, branch manager of Girls InTech Korea, a non-profit organization that supports the leadership development of women in the tech field, said, “An environment must be created where female entrepreneurs can make more diverse attempts in the technology field and at the same time, allow them to freely demonstrate their capabilities.”

Reporter Go Eun-i [email protected]