Report highlights lack of venture capital funding for female-led AI start-ups

A new report from the Alan Turing Institute shows how little venture capital money is invested in AI start-ups led by women – under 3%.

Female business leader conducting a meeting

 

Female-founded companies account for under 3% of venture capital (VC) funding deals involving AI start-ups, according to new analysis.

A new report, Rebalancing Innovation: Women, AI and Venture Capital in the UK, published by The Alan Turing Institute’s Women in Data Science and AI team, shows that, between 2012 and 2022, 80% of total capital invested by VCs in AI was raised by all-male teams. In contrast, all-female teams raised a mere 0.3%.

When female-founded AI start-ups secured funding, they received on average six times less capital per deal than start-ups founded by male entrepreneurs. All-female teams raised £1.3 million per deal compared with an average of £8.6 million raised by all-male teams.

The researchers also highlight that most of the teams who make these funding decisions are men – only 5% of VC firms that participated in funding deals have an equal or majority representation of women at decision maker level.

The report outlines some key recommendations for addressing gender inequality in venture capital, including improving the recruitment and promotion processes at VC firms, fostering an inclusive culture, monitoring investment practices and diversifying the ecosystem.

Dr Erin Young, Research Fellow and Project Co-Lead at The Alan Turing Institute, said: “The stark figures in our report show the extent of gender inequality in venture capital funding.

“Making sure more female-founded AI companies receive investment is crucial for encouraging responsible AI and fostering innovation. One can only imagine what technical products and services might have been invented if women had equal participation in the VC and entrepreneurial ecosystem. We hope that our report offers a crucial starting point for these conversations.”



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