Women facing ‘massive gender gap’ for investor funding

New statistics from Deloitte show women-founded tech companies received just 0.7 per cent of funding in the last 12 months.

The winner of SBE Australia’s ‘game changer’ award was Modibodi founder Kristy Chong – recently named one of The Australian’s Top 100 Innovators – who grew her business from a Sydney market into a $140m enterprise.

Investors are being urged to fix a dismal quota disparity between men and women when it comes to technology business funding, with new statistics from Deloitte showing just 3.7 per cent of start-up funding went to women-founded companies between 2017 and 2021, dropping to just 0.7 per cent in the last 12 months.

Research from Deloitte, Techboard and Australia’s peak body for female entrepreneurship SBE Australia found that only 22 per cent of technology start-up founders are women, though there has been a 95 per cent increase in women starting businesses between 2016 and 2021 in Australia.

Crucially, it found women face barriers that men do not in accessing capital; the low share of investment to female entrepreneurs occurred despite the capital deployed to start-ups increasing tenfold between 2018 and 2022, while the number of deals secured by founding teams with at least one women barely changed.

It follows a recent Boston Consultant Group study that found companies run by women entrepreneurs generated 12 per cent higher revenues annually, using an average of a third less capital than their male counterparts.

“Start-ups tend to be more innovative, and when they scale up, they disproportionately contribute to exports and economic activity compared with other businesses. Without addressing barriers faced by women founders, we are not reaching our full growth potential,” Deloitte Access Economics partner David Rumbens said.

Speaking at SBE Australia’s 10th anniversary gala dinner in Sydney, SBE chief executive Nicole Cook said that women were being effectively being excluded from Australia’s vibrant venture capital sector. She described the funding statistics as shocking.

“The goal is to bridge the investment gap for women, from what is now 0.7 per cent of funding to more equal representation, and the social conditions are perfect to start now,” Ms Cook said.

The winner of SBE Australia’s ‘game changer’ award was Modibodi founder Kristy Chong – recently named one of The Australian’s Top 100 Innovators – who grew her business from a Sydney market into a $140m enterprise.

The research found that the 341 businesses supported by SBE and other female-focused venture capital programs Heads over Heels and Scale Investors over the past decade have facilitated economic activity worth just over $1bn to the national economy and almost 5000 full-time equivalent roles in 2021-22.

It also found that support for women entrepreneurs locally is mostly focused at the ‘pre-seed’ or ‘seed funding’ stages, overlooking a gap for those seeking to scale up their businesses.

Will Richardson, managing partner at investor group Giant Leap, said many technology investors had traditionally been slow to financially back women-led businesses, due to long standing preconceptions and stereotypes, and issues such as the gender pay-gap.

“It’s a no-brainer for us to back women-led businesses. Female entrepreneurs have proven to be innovative, driven, forward thinking, and recognise the value of the dollar and their teams,” he said. “Investors not backing women these days are leaving value on the table, so it’s about time they jump on board.”

Originally published as Women facing ‘massive gender gap’ for investor funding