Female startup founders face more skepticism, loaded questioning, and smaller commitments from investors than their male counterparts. And female founders in agri-foodtech are no exception, according to a new report.

Just 7% of agri-foodtech deals and 3% of the record-breaking volume of dollars invested in the sector 2018 went to female-founded teams, according to the report released by AgFunder, Karen Karp & Partners and The New Food Economy in collaboration with S2G Ventures.

Only 16% of deals and 5% of investment dollars supported startups with at least one female co-founder.

“A structural bias exists which prevents female founders and CEOs from accessing capital to start and grow their Agri-FoodTech enterprises,” read the report, Money Where Our Mouths Are—the first-ever industry study to investigate funding disparities between male and female agri-foodtech founders.

That bias will ultimately hit agri-foodtech investors’ portfolio performance, because women are most tapped into consumer trends; by being “on the front lines of consumer purchases,” women may be best positioned to lead innovation in the agri-foodtech sector, particularly around challenges like climate change and global health.

“We want to support more women entrepreneurs, board members and executives across the industry making a significant contribution to a healthy, equitable and sustainable food system – and that means securing more capital for these growing businesses,” said Sanjeev Krishnan from S2G Ventures. “In order to hold ourselves accountable and address unconscious bias to funding women founders, we first need to understand and benchmark where we are today before setting meaningful goals for the future. That is why this research is so critical.”

The report is timely given Melinda Gates’ recent pledge to invest $1 billion in promoting gender equality.

By the numbers

While committed venture capital in the agri-foodtech sector is increasing, the share of it going to women is decreasing. “Dollar funding for startups in our sample with at least one female founder dropped 37% from 2017 to 2018,” the report states. And in 2018, agri-foodtech startups with at least one female founder received substantially less in dollar funding compared to all industries tracked by Crunchbase — 8% vs 17%. However, in deal activity, agri-foodtech startups with a female cofounder fared slightly better taking 16% of dealflow vs 14% across industries in 2018.

At the stage-level, female founders have better odds of securing first-round capital than closing later rounds. Indeed, female-only and female co-founded teams actually raised larger seed rounds on average than male-only teams. But at the Series A stage, the median deal size for male-only teams was nearly three times greater than for female-only teams. (Mixed male-female teams closed slightly smaller Series A rounds on average than male-only teams.)

There are also discrepancies at the agri-foodtech category and tech-type level.

“Categories that have higher deal volume tend to have less representation of female founders,” according to the report.

For example, women-led startups are less prevalent in novel farming systems, robotics, and retail and restaurant tech than in online restaurants and meal kits, bioenergy and biomaterials and ag biotechnology.

“This opens up the question of whether there’s less interest from female entrepreneurs in tackling the problem spaces in those categories,” the report continues, “or whether female entrepreneurs are shying away from categories that may already have stiff competition.”

Confronting bias

The data likely won’t surprise women leaders and innovators in agri-foodtech. Women interviewed for the Money Where Our Mouths Are research said they’ve confronted both overt and implicit bias on the fundraising trail.

“Some of our male colleagues don’t get asked about revenue–they can be aspirational. When we pitch, we have to prove the numbers,” said Kellee James, co-founder and CEO, Mercaris, a trading platform and data services provider for organic and non-GMO agricultural commodities.

James’ experience is backed up by research from Harvard and Columbia University scholars, which found that VCs ask men and women different kinds of questions in the vetting process.

“They tended to ask men questions about the potential for gains and women about the potential for losses,” the study’s authors wrote. “Investors adopted what’s called a promotion orientation when quizzing male entrepreneurs, which means they focused on hopes, achievements, advancement, and ideals. Conversely, when questioning female entrepreneurs they embraced a prevention orientation, which is concerned with safety, responsibility, security, and vigilance.”

That trend held for both male and female VCs, suggesting that women making investment decisions are similarly biased in their interactions with male and female founders.

Other women have confronted far more overt bias. Christine Su, CEO of land management software venture PastureMap, is a Stanford MBA with experience working at leading consultancy McKinsey, investment at leading private equity firm KKR but she also has a degree in sustainable agriculture and has worked on farms all over the world. Nevertheless, she said, “I was told in early investor meetings, ‘you need to have more old white men on your slides. It’s hard to believe your team has the credibility to win over ranchers.’”

Aligned investors

While funding opportunities may be slim, female founders are discerning about the investor partners they approach, which some say has helped them in the fundraising process. 

“What worked for fundraising was pitching to investors who believed in technical founders being able to solve problems,” said Poornima Parameswaran, cofounder of soil health analytics startup Trace Genomics. “Finding alignment between us and investors was key to raising capital.” (Disclosure, Trace Genomics is an AgFunder portfolio company.)

James, whose company Mercaris was founded with an environmental mission in mind, said she has actively sought our investors aligned to her company’s impact mission.

“Agriculture has a particular vulnerability to climate change. We want investors to be looking at businesses, products that are going to amend or mitigate the next crisis,” said James.

The company is backed by impact investors Closed Loop Capital, which focuses on agri-foodtech, and Kapor Capital, which targets diverse and under-represented founders.

Being selective during the pitch process of course narrows the stream of available capital female founders. But, James noted, early alignment is key to unlocking a business’s potential. “As we grow, we’ve seen how important it is to work with investors that share our vision, that are a fit with what we’re becoming.”