Navasz Hansotia, J.D. Candidate, 2028

The venture capital (VC) landscape is a high-pressure, high-risk environment where founders must navigate fierce competition, complex negotiations, and intense scrutiny to secure funding. For many women founders, these challenges are often amplified by systemic barriers that influence who receives funding and how deals are structured.

Women-founded startups account for only 2% of venture capital funding in the United States. Research has found that there is investor bias towards women during the pitching stage, as demonstrated by the differences in questioning. Women were asked questions highlighting potential losses and risk mitigation, whereas their male counterparts were asked questions highlighting upside and potential gains. Entrepreneurs asked the latter questions raised six times more funding than the former. Combined with limited mentorship networks available to women founders, there is an unleveled playing field within the venture capital landscape.

Yet the challenge extends far beyond unequal funding. Studies highlight women founders often face lengthier term sheets with more protective provisions, less board representation and 35% lower median personal wealth, compared to their male counterparts, impacting access to self-funding or legal counsel.

While lawyers are indispensable, founders need a baseline to strengthen their position at the negotiation table. AI offers accessible guidance, helping empower prospective venture founders to decode contracts, identify governance risks like voting or control restrictions, and negotiate confidently. Studies suggest that women-only founding teams are more likely than mixed-gender teams to see AI as opening doors to more opportunities. Why might this be? Outlined below are ways woman can stand to benefit from employing AI in understanding potential risks:

Leveling the Playing Field: Understanding Term Sheets

Research shows that women founders receive term sheets—which dictate how equity, voting rights, and control are distributed—that are more detailed and packed with protective clauses about 2.3 times more than men. In addition, the due diligence process for women lasts about 1.7 timeslonger than for their male counterparts, reflecting biases that falsely assume they are higher-risk or less aggressive negotiators. Clauses like liquidation preferences (which decide who gets paid first in a sale) or anti-dilution provisions (which shield investors if share prices drop) can quietly erode a founder’s stake and influence.

The AI advantage: There is a rise of tools on the market specifically designed for term sheets. Tools such as Simulfund, uses natural-language processing to analyze term sheets and highlight potentially one-sided clauses. Simulfund and other similar tools simulate the impact of these terms on equity and control, proving useful for women founders who often face more intricate term sheets.

Guarding Governance: Protecting a Seat at the Table

Ambiguous governance clauses on voting rights, board composition, and fiduciary obligations risk founders from being sidelined from key decisions. Women founders hold only 16% of board seats in venture-backed startups, and nearly one-third of such companies have no women on their boards. Under Delaware law, where most VC-backed startups incorporate, board members owe fiduciary duties of care and loyalty. Poorly drafted governance provisions can weaken these protections and limit female founders’ influence.

The AI advantage: Tools such as Captable.Ai and Energent.Ai help founders build their capitalization tables, simulate future funding rounds or dilution scenarios, and project how board seats or voting control will shift over time. This benefits women founders because these tools enable them to model and negotiate governance terms—anticipating board seat dilution, voting power loss, or investor veto dominance—to maintain equitable control within Delaware’s fiduciary framework.

Decoding Investment Instruments: SAFEs and Convertible Notes

Complex contractual clauses: SAFEs (Simple Agreements for Future Equity) and convertible notes are common instruments that allow investors to contribute capital to a startup in exchange for shares once the company raises a priced funding round. Unlike traditional equity investments, SAFEs (Simple Agreements for Future Equity) defer ownership determination to a future funding round. Convertible notes, however, accrue interest and include a maturity date, introducing a different complexity.

Women founders, with 53% less access to personal networks and mentorship compared to their male counterparts, can face heightened challenges navigating these complex terms, risking unfavorable deals.

The AI advantage: AI contract review tools like Hypestart and LawGeex help scan contracts for unusual or high-risk clauses, compliance gaps, and flags unfavorable terms. This benefits women founders by reducing the decoding challenges due to limited network access and lack of industry guidance.

AI is a Compass, Not a Map: The Indispensable Role of Attorneys:

Women founders continue to make strides despite systemic hurdles; accounting for 24.3% of VC exits and delivering twice the revenue per dollar invested compared to their male counterparts. The ability to leverage technology alongside strong legal guidance can help unlock the full potential of women-led innovation.

While AI tools can clarify terms, reduce information asymmetry, and empower informed negotiations, they cannot replace attorneys’ judgment in weighing trade-offs or guard a founder’s long-term interests. For women founders conquering the VC labyrinth, AI serves as a compass that points toward opportunity while attorneys remain the map that ensures the journey ends in ownership.