Female-led Cityblock Achieves Unicorn Status as Global Funding to Women-Led Startups Decline

Toyin Ajayi
Toyin Ajayi

Female-led startup, CityBlock, has raised $160 million in funding at a valuation of over $1 billion. Cityblock was founded by Dr Toyin Ajayi, a medical practitioner of Nigerian descent, in 2017.

She founded the healthcare startup to take care of marginalized patients with complex needs who may not be covered by the fee-for-service structure in healthcare systems in the US. The startup now serves 70,000 users and three U.S. states including the capital, Washington, D.C, according to Bloomberg.

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Women CEOs are not as easy to come by as their male counterparts and female-led Unicorns are even harder to come by. According to a study by a management consulting and venture capital firm, Peter S. Cohan & Associates, the chances of becoming a unicorn is 1 in 5 million. For every 10,000 startups that get funding from venture capitalists, only 1 eventually achieves unicorn status.

Women-led startups received even less funding in 2020 compared to recent years

As of 2019, 113 startups became unicorns and 21 of them were female-led. This is reflective of the disparity between male-led startups and female-led startups. Some of the challenges that women-led startups face when it comes to raising funds include not having enough mentors and the unconscious gender bias that makes investors prefer male founders and consequently, male-led startups.

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In 2020, investors invested even lesser in women-led startups than in recent years. According to a Briter Bridges report, 3.2% of all the monies raised in Q1 2020 were raised by women-led startups while the rest was raised by their male counterparts. The year progressed in a similar taste for both sets of businesses.

Male and Female Cut-out Figures on top of Bundles of Twenty USD Notes / Bills. The pile of Notes under Female Figure is lower than that for the Male Figure.
Source: Getty Images

Data from CrunchBase shows that more than 800 women-led startups raised $4.9 billion in venture funding in 2020. Compared to the $6.7 billion funding raised in 2019, this is a drop of about 27% over the same period. The sharp contrast may be as a result of the covid-19 pandemic which could have influenced investor’s decisions globally.

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In a study of why investors shy away from female-led startups, SMEquest found another possible reason to be that women are more prone to developing female-centric products. These products, even though they may be faring well in the market, often leave investors feeling pessimistic about their chances of surviving in the market in the long-run.

Women are also said to be afraid of failure and as such may not have the risk appetite that their male counterparts have in different areas of business. Investors are more reticent to part with money when it is a female-led business also because of the concern that women may prioritize family and emotional connections over the business.

Therefore, most investors feel that women can not always be counted upon to act fully in the best interest of the business.

This shows that the challenges faced by women-led startups in raising funds is a global one. However, women-led startups like CityBlock, Canva and Calendly that have achieved unicorn status are increasing proof that these startups have a chance at thriving in the long run.

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