“The ideal Australian start-up founder is a photogenic late twenties white male with good school connections and understanding parents/partner, with a 30-second tech app pitch,” says Trish Hyde, managing director at The Plastics Circle, a plastic recycling company.
She doesn’t mean it as a compliment.
Female founders still face significant hurdles when accessing capital, tapping into supportive networks and selling themselves, according to a new study by the federal government which has announced an $18 million initiative to help address some of the issues the report’s authors identify.
In a country where only 30 per cent of ASX 200 directors are women and where seven of those companies still have no female directors, it is perhaps not surprising – but depressing none the less – that such hurdles still exist.
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Hyde told Which-50, that anyone who doesn’t fit the default profile has a handicap. “I’m a full-bodied woman over 50 solving a problem the United Nations Environmental Program just spent four days discussing. Being a woman magnifies other disadvantages.”
The recently released report, Boosting Female Founders Initiative Consultation Outcomes, said 38 per cent of respondents reported funding, investment, money or capital as a barrier for female startup leaders.
The financial barriers were categorised broadly into two areas: the founders’ personal financial situation and attracting investors to financially back the startup.
Cortina McCurry, founder, and CEO of Caia Care, an online health support system for women told Which-50 one of the biggest challenges she faced was convincing male investors that women’s health is a problem that is worthy of investment.
She said, “The reality of the investment world is the majority of investors are male so they don’t have a lived experience of the female body or accessing the healthcare system to get support as a woman and often can’t understand the challenges that come with that.”
McCurry said the reality is women are at a disadvantage when it comes to funding.
“We don’t fit the mold of what a founder typically looks like and may even communicate in a different way. This means we have to work harder to prove ourselves.
“Investors might question us more or expect more from our startups in order to feel as confident in their investment as they might otherwise with a company or founder that looked exactly as they would expect.”
According to the government’s report, 32 per cent of respondents raised the difficulty of finding information resources to support their venture, specifically for the very early stages of a startup.
This included basic material or information, application guidance and financial advice, as well as connections into networks, finding mentors and support groups. 23 per cent cited a lack of confidence in either themselves or the idea for the startup.
Caryn Walsh, founder of leadership and development company Pure Magic said there are other barriers women face when leading a company.
“How to juggle having a family; trying to get a business off the ground; how to manage their time effectively so they can fit it all in; how not to spread themselves too thinly; and how to get the right resources to do what they dream about.”
The impact of the initiative
The report will inform the development of the Boosting Female Founders Initiative, set to launch in July 2020.
The Boosting Female Founders Initiative, introduced by the federal government in November 2018 is designed to support female-led startups. The funding will be available to female founders of startups as finance to grow and scale their startup.
Building a business is hard work and anything that can help remove those barriers, however small, is welcomed, according to McCurry.
“Women often don’t have access to the same networks or relationships that male founders are able to plug into. They also are less likely to be in senior positions, they are more likely to be primary caregivers and therefore may struggle to attend formal and informal networking opportunities and unfortunately face bias, conscious or unconscious.”
Hyde has her doubts about whether this new initiative will drastically change anything. She said the concept is admirable. However, upon reading the report doubts it will change much.
“Look at the challenges they are trying to address [like] access to capital – in Australia we have a risk-averse eco-system with a preference for non-financial support, narrow industry sectors, and low valuations.
“Government matched funding is a mechanism, but it does not overcome the 10X+ private investor expectations nor the investment bias. Other countries have addressed this differently – the US, for example, have corporate ‘giving’ requirements that open up investment opportunities for different sectors and risk appetite.”
Walsh disagrees, saying anything to help female entrepreneurs is beneficial but these businesses need to show that they have a strong business plan, a keen understanding of how to run a business and to be able to manage money and cash flow.
“A great number of entrepreneurial businesses don’t make it 30 per cent of those businesses will go under within two years. Half of them will close their doors for good before they hit five years. In fact, only 25 per cent can stand the test of time for 15 years or longer. In most instances, it is the absence of a firm plan and cash flow.”
Despite the challenges women-led startups face, these businesses can ultimately help the economy. The authors noted the benefits of providing funding and support to female-founded startups.
A BCG study found women business owners receive significantly less investment, a disparity that averages more than US$1 million. These businesses, however, deliver higher revenue, more than twice as much per dollar invested than those founded by men.
The same research indicated startups founded and co-founded by women perform better over time, generating 10 per cent more in cumulative revenue over a five-year period, than their male counterparts
McCurry agrees, saying women often think differently about the world to men.
“They tend to think more broadly about challenges and evaluate more contingencies. Women tend to have a higher social sensitivity, which helps them develop more innovative solutions.
“They are actually more likely to be analytical in their decision making and systematic in how they build things. They are organisers and multitaskers – essential skills when running a startup.”
Walsh said women are notoriously good at juggling many things at the same time.
“We can multitask like demons, so use that as a strength. We can be tough, I think women are often very intuitive and we are generally good at creating great relationships around us.
“These are the things that help us and make us so valuable in a startup, where founders and early employees must wear many hats – as well as the ability to see when something is not working and then design another plan to make it work,” she said.
Boosting Female Founders
Through the Boosting Female Founders Initiative, the government has four key objectives it wants to achieve.
Firstly, stimulate private sector investments into innovative women-led startups geared for growth; help female entrepreneurs overcome some the disadvantages faced in getting access to finance to grow their startups; enable female founders to scale-up, expand into global markets and become self-sufficient; and boost the economy by increasing the diversity of startup founders.
Grants will be available on a co-contribution basis to invest in early-stage startups with female founders and funding will be awarded through merit-based, competitive processes.
According to the initiative, applications are assessed against specific program criteria and eligibility requirements.
There will be targeted funding for female founders experiencing greater disadvantages, including, a lack of connectedness to the startup ecosystem due to the concentration of startup activity in capital cities (e.g. regional, remote or rural); a form of exclusion or disadvantage making it difficult to raise initial seed capital (e.g. Indigenous founders); grants awarded by a panel of startup ecosystem leaders; and administered through the Australian Government’s Business Grants Hub by the Department of Industry, Innovation and Science.
Businesses eligible for funding will be engaging in innovative entrepreneurship – businesses with features including high degrees of innovation; job creation (creates jobs as they grow); wealth creation (directly for founders, employees, and investors, and indirectly for the economy); and positive societal impacts. Startups, innovative, adaptive, early-stage and scalable businesses, with global potential and female-founded women-led with at least 50 per cent of the business owned by women.