How can we break the 3 per cent ceiling around investment in women?

It feels like the three per cent figure is haunting female businesses. Up until the third quarter of 2019, only three per cent of global VC funding has gone to female-only founded businesses. This is mirrored in Australian stats. In quarter three of 2018 it was the same story.

Perhaps we shouldn’t be too surprised when only nine of the top 100 VC partners worldwide are female.

Founder of PledgeMe Anna Guenther says the three per cent figure is haunting women.
Founder of PledgeMe Anna Guenther says the three per cent figure is haunting women.

What if I told you as an investor you could more than double your return on investment (ROI) on a business? You’d think “what’s the catch?” Women-led startups generate almost twice as much ROI for investors as their male counterparts.

There’s a wider conversation we need to start though, around restructuring our society, as gender equity will not be met for another century at the rate we’re changing according to the World Economic forum.


The three R’s – read/write/code

Firstly, the number of female graduates in the technology space needs to increase. Industry 4.0 is here, and there are algorithms being written biased which will impact society for generations. These could exclude the next generation and have a long-lasting impact on diversity and those already considered a marginalised.

In 2001 in Australia, the percentage of female graduates in IT was 26 per cent. Last year, this fell to just 18 per cent. The US picture is pretty similar for the potential of women entering the borderless tech giants which monopolise our time, budgets and lives. Women with computer science degrees represent only 18 per cent of the cohort graduating. In 1985, 37 per cent of graduates were women. How are we doing worse than the ’80s?

Get the foundations right

But it’s not just getting women into a diversity of courses that’s the issue. It’s how we cultivate a welcoming environment to work in, to retain that talent. Senior roles are not held by women in technology, or the financing behind projects. Seventeen companies on the ASX 200 have no women on their leadership team at all.

According to Atlassian’s Global Head of Diversity Inclusion, Aubrey Blanche, we need an inclusive culture before focusing on diversity numbers.

Blanche goes on to talk about the language used to advertise positions, which she changed to focus on skills rather than experiences, removing any potentially aggressive language. As the value of the role was better articulated, it proved easier for females to imagine themselves in it – so much so that women became the majority, 57 per cent, of the new grad class after Blanche made this and other changes.

Project Include is a great resource around how to be more inclusive in your culture, hiring, conflict resolution and even as a VC.

Raising expectations

The idea of maternity leave can be a joke for VCs, not to mention paternity leave.

I still hear founders being asked by potential investors how they’re planning to use their body in the coming years; “Are you a ‘family’ person?” Or what their husband thinks of their company. I’d be surprised to hear of a male founder being asked a similarly intrusive and unrelated question during pitching.

The motherhood penalty is alive and kicking.
The motherhood penalty is alive and kicking. Credit:Shutterstock

The motherhood penalty is still alive and very much kicking. But what if we raised the paternity leave to offer couples the choice of primary caregiver?

New Norweigan fathers have a mandatory 15 week’s non-transferable paid leave, with a further 16 weeks of unallocated leave for couples to share. And it has helped reduce the disparity in labour workforce between the two sexes to 6.2 per cent, down from 20 per cent in the ’80s.

Recently Deloitte topped the best workplaces for new dads in this country for its 18 weeks’ paid leave for all new parents. If we split the child-raising responsibilities, and value all work, our workforce and economy, with additional tax revenue, will be stronger for it.

It’s not all bad

Let’s start getting behind people building amazing businesses. Ten times growth is nice, but it’s probably not going to be sustainable forever, and there might be some hidden negative externalities in the mix. Simply look at the culture created by the likes of Uber for evidence and the issues associated with that approach.

There is a fund in Israel, where over half of its portfolio businesses are led by women. Which shows signs of progress, but there are alternative routes to finance for women.

We’ve seen in equity crowdfunding that women are typically better at activating their crowds. It’s meant that industry-wide across Australia and New Zealand 38 per cent of businesses getting funding have at least one female founder. On our own PledgeMe platform we’ve had 65 per cent come from female-led companies. I’m proud to say that we were the first licenced equity crowdfunding platform in Australia and New Zealand back in 2014, but I’m disappointed to admit I’m still the only female founder leading an equity crowdfunding platform.

While traditional routes to financing may not be set up for access from minority groups and women, we need to strive to improve that situation. It’s good for women, it’s the right thing to do, and it’s even better for our bottom line as investors. So find a way for you to improve this situation in your industry.

Reasons to be cheerful

While only three per cent of VC money is going to female-only founded businesses, there’s another 10 per cent which has female/male founders. So 13 per cent in total for businesses with females at the helm.

Note that 2018’s figures improved dramatically with an outlier series C round from ANT Financial, founded by Peng Lei.

Follow the energy

There are initiatives which are gaining momentum which focus on sustainable growth. Candian-born SheEO is going strong in Australia now too. Depending on your network, your LinkedIn may have been flooded with these images in the last few weeks.

It’s a badge of support. SheEO’s goal is to have one million activators, and a $1 billion perpetual fund which will support 10,000 women-led ventures for years to come. Female activators contributing $1,100 to a fund, they then help select which projects receive investment.

There’s no one solution to the lack of funding for female founders. So we all need to work together to support our sisters scaling their enterprises – whether it’s through funding, buying their products, or sharing their stories. Together, we can do this. I’m in – are you?

Anna Guenther is the founder and chief executive of PledgeMe.

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