Start-up sexism costs billions

Australia’s female founders are struggling to get a slice of the funding pie.

By HELEN SHIELD

Imagine, after years observing cumbersome processes with hit-and-miss results, you invent a straightforward, transparent solution giving consumers easy access to information to make vital decisions. You have contacts, technology, proof of concept and a global market.

Given your expertise and the desperate demand for your innovation, you’d get immediate funding – right? Wrong. And if you are an Australian woman, you couldn’t be more wrong.

The Deloitte report Accelerating Women Founders: The Untapped Investment Opportunity reveals that in the year to June 30, 2022, just 0.7 per cent of Australia’s start-up funding went to companies founded by women alone.

This was despite female-founded start-ups funded by angel investors the year before generating almost 5000 fulltime equivalent jobs and $1 billion in economic activity.

Take Global Study Partners, a matchmaking service for international students and education providers, designed to give students a transparent way to compare and select the best course for them.

Founder Elaine Starkey says raising money was “the most challenging part”. Family and friends stepped up with seed funding, helping her establish proof of concept, but “building a global two-sided marketplace required deep pockets”, with years of stressful, fruitless capital-raising discussions and “committed investors” who never delivered.

Meanwhile, her male-led, overseas-based start-up peers raised capital out of Silicon Valley and Singapore. If she had her time again, Starkey says, she would go outside Australia and take more money at the start.

In her work in international development in Asia, TOQQA founder and chief executive Michelle Curry realised that, as well as being excluded from the financial system, 95 per cent of women ran their enterprises manually.

So, she devised TOQQA, an app with the services needed to manage revenue, performance, growth and sustainability within a single portal.

Her funding attempts were also thwarted. “I decided to bootstrapfund it myself,” Curry says. “On the plus side, I have total control. On the downside, everything is slower.”

Both stories illustrate the struggle faced by female founders to get access to funding to develop businesses that will contribute billions of dollars and generate thousands of jobs.

The inequity is unlikely to stem from fewer female-founder funding applicants, says Loren Bridge, the executive officer of the Alliance of Girls Schools Australia.

“Girls school environments give girls the confidence to step into male-dominated areas, be they leadership, STEM careers or entrepreneurship,” Bridge says, adding she suspects women are applying in equal numbers to men for grants and funding and the problem lies elsewhere.

SBE Australia chief executive Nicole Cook says despite commitments to moving investment metrics “closer to parity”, capital raising is formulaic and hasn’t changed to cater for diversity, and women founders need to be wary of being “handcuffed” to one funding source or taking early capital from a mismatched investor. She backs tax incentives for those who invest in diverse founders. “Seed new funds with an investment thesis aligned to enterprises women are more likely to operate.”

Boosting Female Founders, a Department of Industry, Science and Resources initiative started in 2020 that matches funding, has awarded more than $23 million to 89 start-ups. A department spokesperson acknowledges women founders face obstacles in securing capital, other funding and supportive networks and that “increasing gender diversity of founders also has the potential to strengthen the performance of Australia’s start-up and innovation ecosystems”.

The female start-up angel group Scale Investors, which turns 10 this year, acts as a conduit between female start-ups and high-networth investors. It offers online courses to support founders’ investment knowledge and facilitates sessions between potential angel investors and founders.

Scale mostly runs a syndicate model. “We need more investors investing in this asset class more regularly,” says co-CEO Chelsea Newell.

“And more male investors as allies.” The Deloitte study highlighted that for every dollar of funding, women-founded start-ups generated 78 cents of revenue compared with 31 cents for male-founded start-ups.