‘Time and time again I’m overlooked’: Women locked out of tech funding

Nikki Tugano knows she is an extreme outlier.

As a solo, non-technical, woman of colour founder of a technology company, the chances of her receiving funding from investors are so rare there is no reported data on the statistics.

Tugano has just raised $1 million in funding for SeenCulture, her technology start-up she calls the “Moneyball for HR”.

Nikki Tugano has just raised $1 million in funding for SeenCulture, her tech start-up she calls ‘Moneyball for HR’.

But it was a protracted and tumultuous fundraising process that highlighted the current state of play: funding to Australian women-founded technology companies has fallen to its lowest levels in five years – numbers that were already bad but are further deteriorating.

Tugano is far from alone in bumping up against the harsh reality: the stereotype of a white, privileged tech “bro” winning funding for his technology start-up is still by and large the norm.

The latest funding statistics from each of Australia’s large venture capital firms are damning, and paint a bleak picture for women in Australia wanting to start and grow a technology company.

It’s these companies that will eventually underpin the future of Australia’s economy – the next Amazon, Afterpay or Atlassian – and venture capital funding can make or break those businesses, especially in their earliest stages. Some members of the sector say new laws may be needed to accelerate progress that is currently happening at snail’s pace, if not going backwards.

“Time and time again, I’ve been overlooked and underestimated,” Tugano said. “I think most people don’t really outright intend to do this; it’s largely unconscious cognitive bias at play.”

Tugano was let go from her role as a consultant in 2022, when the company she was working for was acquired.

“I’d been told in my role as a consultant that I couldn’t present or facilitate. They said that because of the way that I look, I wouldn’t have the respect of business leaders out there because I’m very young looking, I’m Asian and a woman. I started SeenCulture to build a product and build tech to do something about it.

“It’s a succession planning platform to put everyone on a level playing field, so people can get recognised for their potential, and their leadership potential in particular, when it comes to things like promotions and job opportunities. It enables people leaders to make data-driven decisions that mitigate bias.”

It was in trying to drum up funding to build out SeenCulture’s platform that Tugano thinks she ran into affinity bias, in which people have a preference for people who are just like them.

“That’s when favouritism can breed,” Tugano said.

“If I’m pitching this to an investor, nine times out of 10 they are a white, privileged man who hasn’t actually felt the pain of what it’s like to be an underrepresented individual wanting to feel seen. So they don’t get it.”

The entrepreneur did eventually win funding from a number of firms, including InterValley Ventures, Techstars, M8 Ventures, Cut Through and LaunchVic, the Victorian state government’s start-up agency. Angel investors including Kirstin Hunter and Preethi Mohan also cut cheques for Tugano.

This is despite the share of capital flowing to female tech founders plummeting to a level not seen since 2019, according to a report this month from Cut Through Venture. Access to venture funding for women is poor globally, but the problem is acute in Australia.

Female-founded start-ups account for 11 per cent of investment deals so far this year. All-male teams have received an average of $4 million per deal in 2024 to date, more than double the $1.8 million average for all-female teams.

One of Australia’s largest venture capital firms, Blackbird, on Wednesday released new data showing that in the past 12 months it invested in 16 new companies, and only five had a woman in the founding team.

In dollar terms, all-female teams have received 5 per cent of Blackbird’s core funds since 2022, compared with 13 per cent for mixed-gender teams, and 82 per cent for all-male teams.

Blackbird’s own data has found no correlation between the gender of the investor making the decision and who they invest in, according to operating principal Kate Glazebrook.Credit: AFR

“We’re frustrated with what we’ve been able to show from the last year, particularly because what’s behind the scenes is an enormously increased focus on this over the last two years at Blackbird,” said the company’s operating principal, Kate Glazebrook.

“I’d say the current state in Blackbird is a sense of exploration. There’s a sense of, we’ve got to be able to have better answers to this as an industry and as a fund.”

While there’s broad consensus among investors that the numbers aren’t good enough, there’s less agreement on what to do about them.

Some think one of the root causes of the issue is a relatively straightforward one: there are too few women at the table making the investment decisions.

‘The start-ups of today are the large corporations of tomorrow, so if we don’t back women-led businesses early, what hope do we have of solving issues like the gender pay gap?’

Rachel Yang, Equity Clear co-founder

Just a quarter of Blackbird’s investment committee are women, a proportion that is similar for its rivals. One-third of AirTree’s investment committee are women, and that firm has made zero investments in all-female teams this financial year, compared with 86 per cent for all-male teams. One of Australia’s other largest venture capital firms, Square Peg, did not provide its diversity statistics when asked by this masthead.

“We’re always open to ways of encouraging diversity across the venture capital and start-up industry, and we recognise there is more support we can provide in this important area,” a Square Peg spokeswoman said.

Blackbird’s own data has found no correlation between the gender of the investor making the decision and who they invest in, according to Glazebrook.

Her company is trying a few things to shift the needle, including allyship training, blind voting in pitches and hiring, and ensuring everyone – man, woman, junior, senior – can effectively express their views. Those efforts have yet to translate into more investments for women.

Rachel Yang is the co-founder of Equity Clear, a recently formed group leading calls for greater transparency and reporting of diversity metrics from venture capital funds. AirTree, Blackbird and others use its templates to publicly report their diversity metrics.

Some venture capital firms have signed a pledge to be transparent about how they fund female-founded start-ups. Samar Mcheileh, co-CEO at Scale Investors, and Rachel Yang, partner at Giant Leap, helped drive the initiative.Credit: Eamon Gallagher

“What’s frustrating is that the narrative is often focused on the fact that women-led start-ups are not being funded, rather than focusing on the benefits of actually funding them,” Yang said.

“Investors are leaving value on the table without realising. The start-ups of today are the large corporations of tomorrow, so if we don’t back women-led businesses early, what hope do we have of solving issues like the gender pay gap?”

Some, including Yang, think that voluntary reporting of diversity metrics doesn’t go far enough, and that legislative change might be necessary.

Australian venture capital firm F5 Collective sponsored a controversial bill in California, SB 54, mandating venture capital firms to report the diversity of founders they’re backing, including race, disability status, gender and LGBTQ+ status.

SB 54 has been signed into law in California and will come into effect from March 2025. F5 chief Tracey Warren wants something similar in Australia.

“In Australia last year, there was $3.5 billion deployed to start-ups. If we move the needle by 1 per cent, and get 1 per cent more into women’s hands, that’s $35 million in additional funding going to Australian women,” Warren said.

“Really robust reporting is a natural place to start and that’s why we sponsored that bill; we had to work with Democrats and Republicans, and we did in the US because we thought that would then give us ammo to walk into Australia, which is 20 years behind on this stuff.”

Tracey Warren, CEO of VC fund F5 Collective, backed laws requiring venture capital funds to report their diversity stats.Credit: Arsineh Houspian

The idea of such a law in Australia is off-putting for local firms such as AirTree and Blackbird, who prefer a voluntary reporting system.

“We’re conscious that founders, particularly of underrepresented or marginalised groups, may not want to disclose all that information, so it should be optional,” an AirTree spokeswoman said.

Some don’t want reporting at all. Australian technology investor Steve Baxter, a former Shark Tank investor and CEO of Transition Level Investments, called the proposal ridiculous. Baxter maintains that investments should be entirely merit-based and that gender should stay out of the equation.

Carolyn Breeze, the CEO of investment fund Scalare Partners, said she sees a significant difference in pitching styles between men and women.

“Can you think of anything more ridiculous than having to ask people you invest in what race they are, are they disabled, what gender or LGBTQ+ status they are?” he said.

“The people caring about this do not care for merit and success but [rather] the outward appearance of things that frankly don’t matter.”

For those who do see the under-representation of women as a problem, some think the issue largely lies with the pipeline; that the statistics are the way they are because there are too few female entrepreneurs applying for venture capital funding in the first place.

Kristen Phillips heads up a female-specific start-up accelerator program, New Wave, based out of the University of NSW. In the past five years, 650 women have gone through the philanthropically funded program and worked on 250 start-up ideas between them.

“The numbers are bleak, and what we’ve seen is that women are being told time and time again that they’re going to be less successful in this industry, and that CEO roles and start-ups are better suited to men,” Phillips said. “It’s this kind of feedback and history that means why would women ever sign up for it?

“Women represent 50 per cent of the population, so if we are getting 50 per cent less of the innovations and ideas, we’re going to miss out on the wealth of ideas and innovations that can serve the whole of our society. I think we need more primary school and high school programs to help challenge that prevalent mentality.

“Everyone talks about needing to financially support women more in the start-up space, but so few do it. We need funds to put their money where their mouth is and put their money into women as direct cash support.”

Others suggest women should perhaps rethink their approach to pitching for funding.

Carolyn Breeze, the CEO of Sydney-based investment fund Scalare Partners, said she noticed a significant difference in pitching styles between men and women.

“I often see women pitch their businesses focusing more on realistic outcomes rather than high-risk, high-reward scenarios that investors tend to favour,” she said.

“Women often talk about the purpose behind the business, why they started this business or created the solution. For example, a woman founder may focus on the need that they meet in terms of other people’s welfare, whereas men tend to focus more on returns on investment and growth vision.

“It is crucial for the entire ecosystem to work together … Collaboration and sustained efforts are key to making meaningful progress in closing the funding gap.”

Tugano is staying focused on building out her start-up. She recently landed Atlassian and Culture Amp as customers, and has now racked up more than 1500 users on her platform.

“It’s been really hard pitching for investment, and when I started I didn’t know anyone. But it’s such an opportune time for what we’re doing,” she said.

“The reason why this talent doesn’t cut through is not because it doesn’t exist, but it’s because of the systems we have in place that don’t enable fairer and more equitable and unbiased processes for deciding who gets invested in.”

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