- Companies with only female founders in agriculture and food tech receive only 7% of investment deals, representing just 3% of all dollars, according to a new study by AgFunder, Karen Karp & Partners and The New Food Economy in collaboration with S2G Ventures. Those numbers increased to 16% if the female founder had a male counterpart.
- The amount of money received by female-founded startups in this sector is falling, with total dollars shrinking 37% from 2017 to 2018, according to the report.
- The study shows this is the result of both implicit and explicit bias. For female founders, questioning from potential funders is more cautionary and more data is required than their male counterparts. The bias came both from male and female venture capitalists making investment decisions, the report found.
For years, food companies have faced a lack of female leadership. But it's not just in the established businesses. According to data from Pitchbook in 2017, just 2.2% of venture capital funding went to female-founded businesses. In 2019, those numbers are only marginally better.
The gaping disparity in funding stems in great part from implicit bias from those who are in the position to open their wallets. The study found 82% of investment decision-makers are men. When polled, one male investor explained, “Investment is risky business. The numbers are the numbers, but I will much more easily take a risk on someone who looks, acts and speaks like me.”
The result is that as an investment becomes riskier, fewer female founders are receiving money. Larger seed funding rounds are raised by female-only and female co-founded teams, but the the study found median deal size for male-only teams was nearly three times greater than for female-only teams by the Series A stage.
Although there is a clear discrepancy in funding, woman-led businesses are one of the fastest-growing entrepreneurship segments, according to the U.S. Small Business Administration. These businesses generate twice as much revenue per dollar compared to other businesses.
Companies are searching for a corrective course for more gender equity in both funding and leadership. Last year, Constellation Brands announced it would invest $100 million in female-founded alcoholic beverage companies by 2028 to boost support for women in a predominantly male industry. And Chobani's latest incubator class, announced this year, targets diverse companies. PepsiCo, which owns Stacy’s Pita Chips, sponsors the Stacy’s Rise Project, a competition where five finalists from female-owned businesses receive a $20,000 prize, business advice and development support. One founder earns a $100,000 grand prize.
Woman-owned businesses can also tell consumers about their ownership with a label from the Women’s Business Enterprise National Council. This program launched in 2015 and has since expanded to 45 countries. This label has been valuable in attracting consumer attention, but there is still work to be done to bring about substantive change within the industry leadership.
With women occupying fewer than 30% of senior leadership positions, and only 13% of c-suite roles in the consumer goods industry — less than any other industry, according to the Network for Executive Women — the skewed representation of gender can make it difficult for female executives or entrepreneurs to identify with those holding the purse strings and calling the shots.
At the same time, this makeup of leadership is not reflective of the industry’s consumer base. Subarna Malakar, vice president of global diversity and inclusion with Ahold Delhaize, previously told Food Dive that 75% of the retailer's shoppers are women.
By not equally financing projects by women, the industry is not only at risk of losing future consumer dollars, but it is liable to pass over lucrative ideas. Females are still by and large the demographic that does the household shopping, and therefore are equipped to generate product ideas that will resonate with the consumer and define trends.
Proof of that concept exists in some recently funded female enterprises like Austin Cocktails, which makes bottled craft cocktails, and Vivify Beverages, which makes hard sodas. Both of these were recently funded by Constellation Brands. Once Upon a Farm, a natural baby food brand, has been one of the most successful investments for Cambridge Companies SPG, CEO Filipp Chebotarev previously told Food Dive. Fourth & Heart is another female-led project that has generated returned on investment for Cambridge Companies SPG.