MARI LUUKKAINEN: The 2% Trap: Why VC Bias Isn’t the Root of the Female Funding Gap
Stop blaming VCs for the female founder funding gap. The problem starts 20 years earlier.
The conversation about women in venture capital is stuck in a loop. Every year, a new report drops showing that female-founded startups receive roughly 2% of VC funding. Every year, the same conclusion: investors are biased, the system is broken, VCs need to do better.
I’ve sat on both sides of this table. As a VC investor trying to solve this from the capital side, and as a female founder building companies. And I’m going to say what most people in this space won’t.
The real problem is not at the investor level. It’s a pipeline problem that starts decades before anyone walks into a pitch room.
The numbers
Let’s look at what’s actually happening.
In 2024, all-female founding teams received 2.3% of the $289 billion in venture capital deployed globally. All-male teams received 83.6%. Mixed-gender teams got 14.1%, according to Founders Forum Group.
Those numbers sound damning until you look at who is actually founding companies.
In the Nordics and Baltics, where I invest and build, the data is even more transparent. Women make up about 11.5% of founders in the Baltic region. Only 23% of VC-backed startups include even one woman co-founder, says Estonian World.
Unconventional Ventures’ Startup Funding Report found that 83.5% of analyzed Nordic startups and scaleups had all-male founding teams.
When I was actively investing, I looked into all the tech companies founded in Sweden, Finland, and Estonia and inferred the founding team composition from their first names. Of the roughly 300 tech companies founded each week across these 3 countries, only about 14% had mixed founding teams. Only 4% of all of these teams had a female CEO.
And let me be clear: women do found companies. Women make up 40% of global early-stage entrepreneurs, according to Ironhack.
From 2019 to 2023, the growth of women-owned businesses outpaced men’s by a massive margin: 94.3% growth in the number of firms, 252.8% in employees, and 82% in revenue.
In 2024, one in ten women globally started a new business, according to the GEM Global Entrepreneurship Monitor.
Women are clearly not afraid to build. The gap is specifically in tech. In tech startups, Ironhack said only 2.7% of women are involved compared to 4.7% of men.
A study of 42 million LinkedIn profiles found that women were only half as likely as men to found businesses in the technology industry.
In deep tech, fewer than 25% of startups have even one woman on the founding team, said Ai-bees.
Women are starting businesses at record rates. They’re just not starting the kinds of businesses that VCs fund, and you cannot fund companies that don’t exist. If the founder pool is that heavily skewed, funding outcomes will be skewed as well.
VCs are incentivised to find you
VCs are not gatekeepers sitting on piles of cash, arbitrarily deciding to exclude women. They’re fund managers with KPIs. They sit on hundreds of millions they need to deploy, or they won’t get more money (the money that pays their salaries, too). They have return targets, deployment timelines, and LPs breathing down their necks.
They are deal hunters. They’re money fuckboys hunting for the next big thing. They are financially incentivised to find the next breakout company regardless of who founded it.
And in Europe this is even more true. European VCs that run on institutional money are under explicit pressure to find female founders. 47% of institutional LPs now ask about diversity metrics during due diligence. 38% of public pension funds have diversity requirements for their fund managers. 23% of European institutional investors have formal diversity requirements for capital allocations, according to data from Founders Forum Group.
A European Women in VC survey of 300+ VC partners and LPs found that 87% believe increased diversity leads to better investment decisions and financial returns. 82% of VCs and 77% of LPs said they consider the diversity of founding teams important when making investment decisions.
In Europe, regulations such as the SFDR have put ESG and responsible investing at the forefront of VC thinking. Portfolio diversity tracking has become so fundamental that many LPs no longer even frame it as ESG. They treat it as a core fiduciary responsibility, the World Economic Forum said.
These funds are literally getting graded on whether they back diverse teams. They are not just willing to fund female founders; they are actively seeking them, yet they still can’t find enough because the pipeline isn’t there.
The performance data proves the opportunity. BCG’s study with MassChallenge found that female-founded startups generate 78 cents in revenue per dollar invested, compared to just 31 cents for male-founded companies.
First Round Capital’s ten-year portfolio analysis showed that companies with at least one female founder performed 63% better than all-male teams. The Kauffman Foundation found a 35% higher ROI for women-led teams.
If VCs are money-motivated, and they are, backing female founders is objectively the smarter bet. The ones who see strong companies fund them. In 2024, 13 female-founded companies reached unicorn status, and women-led companies hit a record 24.3% of total U.S. VC exits.
If you have a strong case, the money will find you. VCs don’t care about your gender. They care about your growth, your market size, and whether this thing can become big.
In my experience as both an investor and a founder, 100% of the cases where a company didn’t get funded because investors “didn’t see them as strong enough” were genuinely not strong enough. I’ve never once seen a highly fundable, objectively strong case get blocked because the founder was female or because a warm intro was missing. Especially the warm intro argument is something I don’t buy at all. VCs are literally incentivized to find you. The idea that a great company is sitting in the dark because nobody made an introduction is a fantasy.
What I have seen is founders who didn’t get funded, then blamed it on gender instead of looking hard at their product, metrics, or pitch. That’s a coping mechanism, not bias. And IMO it’s one that actively hurts the women who are actually building strong companies, because it shifts the narrative away from what matters.
Surface-level fixes don’t work
I’ve sat in countless diversity working groups in the VC world, trying to “fix” funding for female founders. Most of it was performative. Communication tweaks, pledges to “look harder” at female dealflow, a female VC intern here and there, pipeline commitments that sound good in a press release.
None of that changes the outcome because VCs don’t manufacture founders. They see what shows up.
PitchBook’s data confirms this. Early-stage financing for female founders actually declined in 2024, with only 20.5% of first financings going to women-led startups, down from 26.5% in 2020.
The bottleneck isn’t at the capital allocation stage. It’s in the company-creation stage. I’m saying this as a female investor who wanted to solve the issue from the investor side. I couldn’t. Because there wasn’t the damn pipeline.
Where the pipeline actually breaks
The research is unambiguous about when and why women drop out of the path toward founding tech companies. It happens already in childhood.
A Microsoft-commissioned study of 11,500 girls across 12 European countries found that girls become interested in STEM subjects around age 11, then quickly lose interest by age 15.
Unlike interest in the humanities, which rebounds, STEM interest doesn’t recover. That gives governments, teachers, and parents roughly four to five years to nurture that passion before girls turn their backs on these areas, potentially for good.
A 2024 ROX Impact Report found that only 59% of girls believe they are good at math and science, down from 73% in 2017. Among 5th and 6th-graders, 52% don’t believe they’re smart enough for their dream job. That’s more than double the 23% reported in 2017.
The NESET advisory network from the European Commission found that girls tend to have less confidence in their STEM performance than boys, even when their performance is better, BBVA said.
Research on the “leaky pipeline” shows that stereotypical occupational preferences are internalised during childhood and stabilise by around age 14.
The World Economic Forum has stated that breaking down gender stereotypes around STEM must start through early childhood education.
The bottleneck starts with:
Media role models that don’t show women building products
Childhood expectations that steer girls toward communal rather than technical paths
School environments where STEM confidence erodes for girls between ages 11 and 15
Outdated curricula that don’t connect technology to real-world problem-solving
Subtle signals about who “belongs” in tech
By the time the investment conversation happens, the pool is already filtered. Many girls have opted out years earlier because they never saw themselves in that world.
What works
If the pipeline problem is created early, that’s where it has to be fixed.
More women moving from operator roles to founder roles. The tech industry is full of talented women in product, engineering, and leadership positions. The gap is the jump from employee to founder. More women need to see founding a company as a realistic next step, not an exception.
More technical confidence and product ownership. When women build things, even small things, the psychological barrier to entrepreneurship drops. This is why I’m putting energy into vibe-coding workshops for women and in high schools through FemCode Collective. Teaching girls and women that creating tech products is accessible and normal changes the equation.
More risk-taking earlier in careers. Research published in Frontiers in Psychology confirms that long-term, hands-on interventions are the most likely to result in meaningful and sustained STEM engagement.
Multiple studies show that exposure to female role models and representation directly increases girls’ confidence and changes their perception of STEM fields.
Exposure. Confidence. Hands-on building. Showing that creating products is accessible and normal. That’s the work.
The uncomfortable truth
I know this perspective is uncomfortable. It’s easier to point at VCs and say “fund more women.” But that framing is just a coping mechanism.
If you’re not getting money or getting noticed, you need to build a stronger case. The money will follow.
The real work is harder and less headline-friendly. Getting more girls into building before they’re 15. Getting more women from operator to founder. Getting more technical confidence into the hands of people who’ve been told this world isn’t for them.
Blaming investors is easy. Building a pipeline is harder, but that’s where the change happens.
Mari Luukkainen is a vibe-coder and investor at Identity.vc