Getting a fair share

Saturday, 01 April 2023

Susan Muldowney

    Australian female tech entrepreneurs say growing social and environmental needs will drive capital to traditionally underserved markets — and women founders finally stand to benefit. 

    Kerri Lee Sinclair has a new investment hypothesis. And if the founder and non-executive director who has spent over 20 years working across the country’s high-growth ecosystem, is right, the Australian entrepreneurial landscape is set for transformation. 

    “We’re heading into a new economy, which is going to prioritise sustainability,” says Sinclair, chair of the women’s tech accelerator SBE Australia and a non-executive director of tech startups including Versent, AgriDigital and SPEE3D. She also co-founded startup music platform AgentArts, which was sold to Microsoft in 2007. 

    “That’s the opportunity, because if you look at it as an investor, your best returns come from an underserved market. If the underserved market is known to outperform, and you want to support economic complexity in a gender-balanced way, this is where the money’s going to go.”

    When it comes to raising capital, women founders have long received a fraction of the funding of their male counterparts. But as capital availability aligns to the new economy around responding to climate change, deep tech, agritech and business for positive social impact, new opportunities are emerging for women. 

    Sinclair sees this leading to more funding for women-led tech startups, as well as more of the support they require to scale their businesses. “The opportunity is to think about their business with the lens of the new economy,” she says. “My investment hypothesis is that the new world needs new solutions and new people to solve problems. Women are going to need to have digital innovation — some sort of technology or IP that can wrap the business together.”

    Innovation for gender equality

    Accelerating women’s tech entrepreneurship presents a significant economic opportunity.

    In 2022, after 10 years in operation, SBE Australia commissioned Deloitte Access Economics to undertake research into trends in women-founded businesses. The results show that FY21, the 341 individual businesses supported by women focused entrepreneurship accelerators SBE, Heads Over Heels and Scale Investors facilitated $1b in total value-add to the Australian economy and supported almost 4900 full time equivalent roles across the country. It also revealed that just 0.7 per cent of funding secured by startups went to solely women-founded companies last financial year, despite funding for startups increasing tenfold between FY18 and FY22.

    Research from Boston Consulting Group shows that for every dollar of funding, startups founded or co-founded by women generated 78 cents of revenue, while male-founded startups generated just 31 cents.

    “The fundamental reason that the data shows women run businesses better with less money is that there are fewer female entrepreneurs and we raise less money,” says Sinclair. “People running businesses have to run them well. That’s the opportunity for anyone who wants to invest in women, because they’ve never been given the money, so they manage a business much better. They may not grow as quickly, but that’s OK, because growing at all costs is not sustainable.”

    Katy Barfield OAM, CEO of food redistribution platform Yume, which she founded in 2014 to address food waste, believes that for-purpose-for-profit businesses present opportunities for women entrepreneurs to thrive in the new economy. “Companies thriving just for the sake of money and at the expense of the environment and of society — I’d say their days are numbered,” she says. “We need to focus on for-purpose-for-profit businesses. This will make people feel quite nervous, because change is tough, but it is the way the world needs to go.”

    Barfield was founding CEO of Australian food rescue organisation SecondBite before starting Yume, and says that as she focused squarely on impact investors, she “didn’t experience significant challenges raising capital.”

    “I did have a capital-raise expert who navigated for me and got the right people at the table, but I was the one doing the talking and selling the vision in those early days.”

    Claire Rogers MAICD is CEO and co-founder of purpose-led tech venture Oho, which helps to manage employee and volunteer work accreditations to protect vulnerable people. A former CEO of World Vision, Rogers has also held senior executive roles at ANZ Bank, and says an entrepreneurial mindset was something she had to develop.

    “When we started the business [in 2020], we were working in a blue ocean — there was nobody doing what we were doing to make a market with software and digital tech for such a great purpose,” says Rogers, adding that Oho has received funding from female-focused investor networks such as Scale Investors and LaunchVic’s Alice Anderson Fund.

    “Throughout my career, I’ve jumped into new things consistently and have often had the job of bringing the market along,” she says. “But there have certainly been huge skills I’ve had to acquire, particularly in the area of fundraising and capital structures and learning to build a business with a small amount of resources — every penny counts and big business could benefit from this mentality.”

    Tackling the barriers

    There’s cause for optimism for women entrepreneurs harnessing technology to drive positive change, but persistent barriers remain. 

    Nicole Cook, SBE Australia CEO, describes the challenges that limit women’s ability to scale their businesses as “complex and multifaceted”. She says part of the problem is a lack of transparency of data within the private capital investor community, which makes it tough to hold investment funds to account when it comes to gender equity — adding that VC funds also remain narrow in their investment focus.

    “A lot of the big funds have the exact same investment thesis, which is around business-to-business, and SaaS products and fintechs, and women aren’t necessarily starting businesses in these areas,” she says.

    While SBE Australia’s data shows more funding for women in the very early stage of their business, Cook notes that they are relatively small cheques that are “not moving the dial for the business”.

    “There are barriers in terms of the number of women who have businesses ready for later-stage investment, and there are barriers to the processes if they are ready,” she says. “That’s the unconscious bias or pattern matching from investors of what looked good yesterday, I’m looking for again today. If we work collaboratively to measure progress through established metrics and transparency of data from private funding, and add accountability somehow, then we’ll start to see change. That, combined with the positive trends about getting more women into STEM careers — including in life sciences and deep tech — and then combining an entrepreneurial mindset, we will see this change in the next 10 years.”

    From startup to scale-up

    Cook says a priority for SBE Australia is to “activate the scale-up space” over the next decade. “We need to help the businesses that have already got to a certain point of growth to survive the valley of death,” she says. “This is where they typically fail or they don’t meet the investment criteria and we really step in and activate. So, if they’re getting feedback from investors that they’re not ready, we can see if we can help them get ready.”

    However, Sinclair adds that scaling a business adds another layer of complexity for women entrepreneurs. “At some point, when women-led businesses scale and become successful, on the statistical odds, the woman will probably step away and hand it off to a man,” she says. “Now, she may not, but at the end of the day, do we want successful businesses, or is it successful women or successful families? It’s always going to be a choice and it’s that complexity we need to talk about. I refuse to say that we should only fund women, or only fund businesses that are 50 per cent women, because while it’s very easy to do that in the very nascent stage of a business, it’s very unlikely you can hold to those numbers by the time it’s a billion dollars. Pick any publicly listed company and tell me, which of the women still owns 50 per cent?”


    In total value-add and 4900 FTE jobs created by targeted support for women founders


    Of founders says the most common barrier to growth for program participants is access to funding


    Of Australian startups are founded by women


    Of capital raising deals go to solely women-founded teams


    Of private startup funding in FY22 went to solely female founding teams, despite funding increasing tenfold between FY18 and FY22

    Source: Deloitte Access Economics (2022) Accelerating Women Founders

    New economy, new opportunities

    Despite the challenges for women entrepreneurs, Cook says there is an appetite for trends to change. She also points to an increase in women entering STEM careers as an opportunity for entrepreneurship as capital availability aligns to the new economy.

    “The need for real advancement in tech and deep tech and life sciences is an economic opportunity for Australia,” she says. “Working with these sectors to encourage women to lead not only the research, but the commercialisation of that research through entrepreneurship, is a massive opportunity we would miss if the availability of associated capital doesn’t match.”

    Dr Ilana Feain GAICD, principal consultant at Big Science Industry Engagement Services, which works with scientists to help commercialise their research, sees huge scope for women in deep tech. “You have the most to gain and the most to add by getting your claws in and pulling out the brilliance of deep tech,” says Feain, co-founder of medtech company Leo Cancer Care and a director of Quasar Satellite Technologies and Astronomy Australia.  

    “The government is on board by prioritising key innovation areas and they require brilliant physicists and mathematicians and software developers. The more equal and diverse that pool, the better.”

    Australia’s rapidly growing agritech industry also presents opportunities for women. Associate Professor Amy Cosby, dairy farmer and senior research fellow — agritech education and extension at CQUniversity, sees technology fostering gender equality across the agriculture industry.

    “Agriculture is still a male-dominated field with women only representing 30 per cent of full-time positions, but more than 80 per cent of off-farm income is being derived from women,” she says. “As our opportunity to adopt more technology or to be involved in the development of technology in agriculture grows, women will become more empowered, leading to more gender equality, because we’ll have the opportunity to shape roles for how they’ll suit us.”

    As the new economy continues to take shape, Sinclair is optimistic about opportunities for women entrepreneurs, but stresses that change won’t happen overnight. “There’s amazing opportunity in the new economy, but are the funds set up to do it? Is the money ready to deploy? It is, but, like any major shift, it’s going to be a bit messy for the next calendar year. I suspect we're going to still see women not getting enough money at the right stages, but I think it'll organise itself.”

    Three themes for IWD 2023

    1. How digital inclusion drives gender equality

    Claire Rogers MAICD is a former banker and CEO turned co founder and CEO of Oho, a social software enterprise to manage employee and volunteer work accreditations with a primary purpose to protect vulnerable people.

    “I learned about the connection between gender digital inclusion and gender equality while I was CEO of World Vision. I’d look to some of the poorest nations in the world and would see people with mobile phones and think, ‘How’s that possible?’ But, when you think about what digital inclusion means, your phone is your safety — it’s your alarm system if you get into danger. If your banking system is immature or non-existent, it's your access to money. It's also your education system, providing access to a world of possibility if you have a repressive government that's not letting you have information. 

    Digital technology is vital for our society and it will bring on a huge bright intelligent labour force of women and girls if we use it effectively. Digital technology is the great democratiser of our world if we use it well for that purpose.

    I recently read that a high proportion of the next generation coming into the workforce is going to have a side hustle as well as their full-time job, and that’s very exciting. There will be a lot of female businesses being spun off and set up, and I think we’re in for a period of quite interesting innovation, provided they can get access to funding.”

    2. How inclusion drives innovation 

    Katy Barfield OAM is founder and CEO of Yume Food Australia, a food redistribution platform that connects surplus food from manufacturers, to other businesses and charities that can use it.

    “I’ve got an all-female team at Yume and I’ve been asked whether it’s by design. All I can say is I employ the best people for the job.  

    Some of the best ideas come from the corners you least expect them to. And when you talk to some of the really powerful change-making female leaders in the FMCG [fast-moving consumer goods] world, for example, they never think they’ve got all the answers. They’re building planes as they’re flying them and hoping they can get them to the destination. That gives permission to everybody in your team, everybody within your company, to step forward with ideas.

    More needs to be done on publicising the success of female founders and the return on investment, because that’s the language the market recognises. Let’s focus the conversation less on the obstacles that women founders face and more on the results they deliver.”

    3. How to create an entrepreneurial ecosystem that supports women founders

    Dr Ilana Feain is an entrepreneur and non-executive director who works in commercialisation of science and technology.

    “In terms of building an ecosystem that supports females, it’s a lot harder to be what you can’t see. We need full representation of all stakeholders across all areas of the ecosystem and that includes representation across investors, IP attorneys, mentors and particularly in boards of startups.

    When I co-founded Leo Cancer Care and ran it as founding CEO, I considered it to be my baby. I had two little ones at home at the time, so this startup was really my third baby. In many ways, I sacrificed a lot of time with my real babies at home to grow my third one. I took it so personally — whether that’s right or wrong, that’s just what I did.

    If a startup fails, it’s very easy for the entire ecosystem to equate that failure with the failure of a startup founder, and it's very easy for women to buy into that. When startups don’t succeed, the ecosystem should be there to support the founder as a growth opportunity.

    What excites me is the opportunity for scientific innovation that translates into lasting impact for the world. Medtech, biotech, space tech, climate tech, quantum robotics — these are all areas where we have underrepresentation of women engineers and physicists and business leaders.” 

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