Kimberly Gray is about to start her first major fundraising effort for her female-led tech startup Uvii, which was launched during COVID to make education more accessible through mobile-first learning. She has added a platform called Insync, which uses artificial intelligence to improve the onerous government contracting process.
She has tried to position her company for success. She has won a spot as a Google startup, which comes with assistance. She has completed the city’s company founder fellowship program, which is designed to teach company start-up leaders how to raise money and especially encourages female, Black and indigenous founders to apply.
But raising $3 million will not be easy and she knows it. While venture capital investment in New York tech companies has rebounded strongly from its pandemic lows, companies led by women are actually losing ground.
“There is a lot of money coming to New York City but it is not trickling down to women and minority founders,” she said. A growing backlash against diversity, equity and inclusion programs hasn’t helped, she added: “With DEI initiatives being under attack, it is important to be super focused.”
Venture capital investments in New York City companies are expected to have surpassed $20 billion last year, easily exceeding the 2023 total of $17 billion. Yet venture deals for female-led firms through the first eight months of the year declined by a little more than 50%, with 87 investments raising only $350 million, according to a recent analysis by Wells Fargo and the data site Pitchbook.
This is typical of what happens to such founders in the cyclical venture capital industry. When investment declines, female-owned companies are the first to be cut off from funds and the last to be considered during the rebound, according to Geri Stengel, head of Ventureneer, which is focused on helping women raise money.
“This is a longstanding structural change effort,” she said. “We are talking about groups that have been left out of the growth of the economy.”
The tech industry has become a crucial part of the city’s economy. It now employs more people than Wall Street. Its average wage of $120,000 is almost twice the amount for the rest of the private sector, and accounts for 10% of all the wages in the city.
But the sector remains overwhelmingly white and male (although slightly more diverse than in the Bay Area). Making it more reflective of the city’s population is a key priority of the city Economic Development Corporation.
Its primary tool is a founder fellowship, the program Gray participated in. More than 250 New York City-based founders and co-founders across 168 tech startups have participated, two-thirds of which have one female founder.
A year ago, EDC established the Venture Access Alliance, which now boasts more than 100 members representing a range of small, medium and established VC firms. It is beating the drum about the need to invest in women tech firms and tries to make connections, especially between the founder fellows and the sources of money.
This is a model that Los Angeles instituted several years ago and is now beginning to show success, said Stengel.
The goal is ambitious.
“We want an inclusive tech system — that means women and people of color,” said Cecilia Kushner, chief strategy officer at the Economic Development Corporation.
The reality is different. Gray was unable to turn any of her connections through the Venture Alliance into funding.
“I have patents and we have clients in the public and private sector,” she noted. “Fundraising has been challenging.”
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