The gender gap in VC and Investing: Women Founders Face Struggles

Women remain underrepresented at all levels of the corporate ladder, particularly in senior leadership, where they hold just 29% of C-suite roles, according to McKinsey’s report. The report also highlights that women in entry-level positions are less likely than men to be encouraged to use AI, which may contribute to a gap in real-world usage.

A recent lawsuit, in which a former president at Insight Partners, a major VC firm, sued the company for gender discrimination, has reminded people of the ongoing diversity challenges women face in investing and other male-dominated industries. Investors warn that in terms of diversity in VC funding, some of the Central and Eastern European (CEE) countries remain far behind.

European companies founded or co-founded by women have received a smaller share of total deals compared to previous years, shows the latest Pitchbook data.

In some CEE countries, funding for female-led companies remains exceptionally rare. Since 2008, women-founded startups in Europe have attracted €8.8 billion across 5,933 deals, based on the country where the companies are headquartered. However, in countries like Serbia, Latvia, Croatia, Slovenia, and Ukraine, there have been very few publicly announced VC investments in companies led by women.

When considering companies where there is at least one female co-founder, CEE countries also lag behind Western or Scandinavian ones.

According to Daiva Rakauskaitė, manager at Aneli Capital, a fund management company that supports CEE startups, one key reason is the region’s lower number of women-founded startups.

“VC is still a relationship-driven industry dominated by men, which means deals often stay within the male networks. In the CEE region, some investors are more conservative, and there are fewer women founders, which limits the opportunities for investors to support them,” Rakauskaitė explains. “I believe women should boldly enter sectors traditionally targeted by VCs. If we also apply research showing that diverse teams generate more value, VCs could unlock the potential to create even more unicorns than before.”

A number of studies have demonstrated the benefits of women-led or diverse funds or companies. Harvard Business School showed that VC firms with 10% more female investment hires make more successful investments at the portfolio company level and have 9,7% profitable exits, according to the Milken Institute report. Meanwhile, a study by Grant Thornton found that diversity strategies in companies bring cultural benefits and an increase in innovation.

According to Rakauskaitė, CEE investors and startups could greatly benefit from diversity-friendly investment policies. However, she emphasizes that the focus should be on the overall quality and values of teams, rather than just gender.

“Founders of startups must focus on delivering results and demonstrating that all genders matter equally when it comes to shaping the future of the industry. Gender should not be a limiting factor in talent recognition; what matters most is the strength of the team, their vision, and their ability to execute,” Rakauskaitė says.

Looking beyond women in the VC and investment space, the McKinsey report shows that for the 11th consecutive year, women remain underrepresented, especially in senior leadership, where they hold 29% of C-suite roles.

The report shows that some problems may often arise already in entry-level positions. For example, 21% of entry-level women are encouraged by their manager to use AI, compared to 33% of men at the same level. As a result, only 37% of entry-level women believe AI will improve their career prospects, compared to 60% of employees overall.

According to Rakauskaitė, this shows that the future of diversity ultimately depends on managers' actions and their personal growth as quality leaders.

“Managers have a critical responsibility to support their teams' growth in any field - be it venture capital, investing, or business. As we look to 2026, it is crucial that we not only continue to challenge the status quo but actively foster environments where all talents, regardless of gender, are equally recognized and nurtured. This, in turn, creates added value” Rakauskaitė concludes.