Australian Female Founders Face Funding Hurdles, Eye Silicon Valley

Australian female-led startups are encountering significant obstacles in securing venture capital funding. Startups founded solely by women received a mere 2 percent of the $4 billion in total capital raised in Australia during 2024, a decrease from 3 percent in 2023, according to data from Cut Through Venture.Jessica Box, previously a growth leader for Linktree, and her former colleague Susan Hion-Jarvis, launched Matched in November after raising approximately $500,000 in angel-round funding. Box is now looking towards Silicon valley for the next round of funding, citing a greater “risk appetite” compared to the australian market.

The persistent disparity in funding for women-led businesses has sparked concern and frustration within the Australian startup ecosystem. Jessica Box, founder of Matched, a platform connecting individuals wiht paid trainers and advisors, expressed her dismay at the statistics.the data reveals a stark reality: year after year, only a small fraction of total venture capital is allocated to companies led by women, despite evidence suggesting that female-founded startups attract a higher share of funding at the early “pre-seed” stage.

However, when it comes to larger, later-stage venture capital funding for technology startups, the playing field remains heavily skewed in favor of male-led ventures. This imbalance underscores the systemic challenges faced by female entrepreneurs in accessing the capital needed to scale their businesses.

Box reflected on the challenges,noting the inherent bias women face when seeking funding.

When your walking into a room … all the statistics are stacked against you.

For her startup, Matched, which launched in November after securing approximately $500,000 in angel-round funding, Box is now setting her sights on Silicon Valley for future investment. She believes the U.S. market offers a more favorable environment for startups seeking capital.

The difference in the australian market in terms of risk appetite,comparative to the US,where people are happy to write you a check on a napkin,is [investors asking],’we need to see revenue,and then we also need to see experience,’
ms. Box said.

She further elaborated, “I think where for women, that becomes particularly challenging, is there’s not as many women with the experience.” This highlights a potential cycle where lack of funding limits opportunities for women to gain the experience needed to attract further investment.

VCs Pledge to Back more Women

Blackbird Ventures, one of Australia’s largest venture capital funds, has faced scrutiny for its investment record concerning female-founded startups. Kate Glazebrook, the fund’s head of impact and operating principal, acknowledged the need for advancement, stating that the fund has made a pledge to back more women, but it’s “still a work in progress.”

Blackbird’s data reveals that in the 2024 financial year, only 31 percent of the startups pitching to its investment committee had a woman on the founding team, a decrease from 37 percent the previous year. This fell short of their target of 40 percent.

Glazebrook admitted, “We haven’t moved the needle as quickly as we want to.” However,she emphasized the presence of accomplished female founders within their portfolio and the broader ecosystem. “But equally, we certainly know that there are thousands of fantastic female founders, many of whom are in our portfolio, building phenomenal businesses.”

She also highlighted the significant impact of canva, led by female founder Melanie Perkins, on the Australian startup landscape. “Our fund,like many others in the ecosystem,was really made by Australia’s moast valuable privately held company,which is Canva,which is led by a female founder,Melanie Perkins.”

Many of us have actually built our careers off the back of a phenomenally successful mixed-gender team, and we need to be starting to tell more of those stories.

Glazebrook believes that while a pipeline problem exists, with fewer women emerging from traditional entrepreneurial career paths, investors are increasingly broadening their perspectives on what constitutes a successful entrepreneur. “there are too few women coming out of the types of careers we would usually associate with entrepreneurship,” Glazebrook said.

She added, “But I think we’re increasingly starting to see the industry take duty for other parts of the problem that it can start to change … like looking at the way we make investment decisions, making sure that there’s not a single archetype of founder that we over-focus on.”

We want to be making sure that there’s no chance that we’re accidentally missing out on the next Mel from Canva just as she presents in a slightly different way.

The Broader Context: Diversity and Inclusion

The ongoing debate surrounding funding for female founders coincides with a shifting corporate climate,particularly in the United States. Former U.S. President Donald Trump issued an executive order to abandon workplace diversity and inclusion policies, arguing that quotas promote discrimination. In response, global companies like Google and Accenture have reportedly abandoned diversity quotas, perhaps impacting their Australian operations.

The challenges faced by female founders in Australia highlight the need for continued efforts to address systemic biases and promote a more equitable funding landscape. While progress is being made, the data underscores the urgency for venture capital firms and the broader startup ecosystem to actively support and invest in women-led businesses.

Push for mandatory Diversity Reporting in Australian Venture Capital Following US Example

Calls are mounting for Australia to implement mandatory diversity reporting for venture capital (VC) firms, drawing inspiration from California’s pioneering initiative in 2023. This push aims to foster greater diversity, equity, and inclusion within venture capital investments. Marisa Warren, a seasoned VC investor and board member, is a leading voice advocating for these changes. Warren, currently the founder and managing partner at Aliavia Ventures, a California-based fund investing in female-led startups across the U.S. and Australia, believes that mandatory reporting is a crucial step toward achieving meaningful progress in Australia.

The introduction of mandatory diversity reporting in California in 2023 marked a significant milestone as the first openness measure of its kind in the United States. Now, advocates are urging Australia to follow suit, believing that similar measures could drive ample change in the local venture capital landscape.

Accountability is Key to Driving Change

Marisa Warren emphasizes that reporting requirements alone are insufficient; thay must be accompanied by concrete action. She proposes that limited partners, who invest in venture capital funds, should hold general partners accountable for failing to meet diversity targets. This approach, she argues, would create a powerful incentive for change.

Unlocking Capital: The Urgent Need for Gender Equity in Venture Funding

The venture capital landscape in Australia faces increasing scrutiny as discussions around gender diversity and equitable funding opportunities for women-led startups gain momentum. Marisa Warren is advocating for concrete action, including quotas and accountability measures, to address the underrepresentation of women-led startups. While some investors are taking proactive steps, significant challenges remain, and a collective effort is required to unlock the full potential of women entrepreneurs and drive economic growth. The debate includes perspectives on whether venture capital funds should engage in gender diversity reporting, showing the number of female-led funds they invest in, as well as the number of partners hired at firms.

The debate Over Quotas in Venture Capital

The question of whether to implement quotas for venture capital (VC) firms investing in women-led startups remains a contentious issue. Some argue that quotas could lead to unintended consequences,possibly hindering the selection of the most promising ventures. One outlook suggests that mandating investments in a certain number of companies founded by women might face resistance from investors. The concern is that such mandates could compromise their ability to achieve the best possible returns for their investors.

However, proponents of gender diversity initiatives argue that proactive measures are necessary to level the playing field. They contend that biases, both conscious and unconscious, can disadvantage women entrepreneurs, making it harder for them to access the capital they need to grow their businesses. At Giant Leap, they “as much as possible,check each other on our potential biases,so that if we think that we’re potentially biasing based on a founder,then we’ll have a conversation about it”.

The long-term implications of neglecting gender diversity in the startup ecosystem are significant. As one industry observer notes, “I think the startups of today are actually the big corporates of tomorrow.” This perspective underscores the importance of fostering diversity from the outset. “if we’re not having this conversation now and supporting startups that are diverse now, then we’re just perpetuating an endless cycle of corporates that continue to have and demonstrate bad behavior in relation to gender equity.”

Connections and Access to the Right People

Krissie Jones, NAB’s executive for small business, sees merit in exploring quotas for VC firms and advises start-ups seeking funding from banks to present solid plans. She emphasizes the importance of a well-structured business plan for startups seeking funding from banks. “A really strong business plan that’s been well-thoght-through in terms of, who are they targeting, what is it that they’re wanting to take to market,” she said.

A complete plan should address key aspects of the business, including target market, product or service offerings, and financial projections.”It makes a really big difference thinking through,what dose the cash flow look like? What are those business projections?”

Beyond a solid business plan, Ms. Jones also urges women to network and find mentors who can help them make connections. For some entrepreneurs, these connections have been instrumental in securing early-stage funding. For example, one startup relied on the help of Smiling Mind co-founder Janey martino to get introductions to investors.

“[Ms Martino] understands the market really, really well, and she provided us with both experience and access,” one entrepreneur said. “She kind of short-circuited that knowledge gap.”

Overcoming Rejection and Securing Funding

Ultimately, Matched secured investors including Modibodi founder Kristy Chong, Frank Body co-founder Bree Johnson, angel syndicate FB10X and LaunchVic’s Alice Anderson Fund, which supports women-led startups. While governments can play a role in facilitating access to funding for women, some argue that quotas can “create the false sense of pushing someone forward when maybe they wouldn’t have been put forward”.

“You don’t want to be there as a token. You want to be there for your contributions and your voice,” one entrepreneur said, highlighting the importance of merit-based opportunities.

Another crucial aspect of securing funding, and succeeding in the startup world in general, is resilience. Aspiring entrepreneurs must be prepared to face rejection and persevere despite setbacks.As one entrepreneur notes, Canva co-founder Melanie Perkins “had hundreds of ‘no’s before she got her first ‘yes’.”

A lot of the reasons why people miss out on funding is as they give up before getting that first ‘yes.’

Marisa Warren believes that setting quotas and key performance indicators (KPIs) is essential for driving behavioral change within the industry. She envisions a system where general partners face tangible consequences for not meeting diversity quotas, such as reduced capital drawdowns from limited partners.This, she argues, would significantly impact their ability to deploy capital in the market and incentivize greater investment in diverse founders.

“I’ve seen that quotas and KPIs drive behavior change, and we need significant behaviour change in australia.”

Warren elaborates on the potential impact of such quotas:

“[The quotas could mean] for me as a general partner, if I don’t meet my diversity quota, or gender diversity quota, then I can’t draw as much capital down from those limited partners.”

She adds that this would have a “significant impact on my ability to continue to deploy capital out in the market,” and that she believes this is “a real way to be able to have and to influence that behaviour change.”

Warren stresses that investors need to critically examine why they are not investing in women-led ventures.She expresses her personal commitment to creating a more equitable future for her daughters:

“I’m a mother of two girls,a five-year-old and almost three-year-old — I want them growing up to be able to have the same opportunities as men in the world today.”

Data indicates a significant disparity in funding, with women-only-led funds typically raising only half the capital compared to male-only-led funds. Warren points out the stark underrepresentation of women in leadership positions within the Australian venture capital industry:

“In the venture capital industry in Australia, there are less then 10 female general partners out of well over 150 venture capital firms in Australia — that stat on its own is appalling.”

‘Two Steps Forward, One Step Back’ in Diversity Progress

While some investors are proactively addressing the issue of diversity, progress remains uneven.Giant Leap, a venture capital fund focused on startups with positive social and environmental impact, is one such example.

Rachel Yang, a partner at Giant Leap, notes the disproportionately low funding received by women-led funds, despite evidence suggesting their superior performance. She cites Boston Consulting Group (BCG) reports indicating that women-led businesses generate higher revenues with less capital.

Data from Cut Through Venture reveals a concerning trend: in 2024, approximately 15 percent of investments went to startups with at least one woman in the founding team, a decrease from 18 percent in 2023.

Yang attributes the persistent gender imbalance to factors such as gender imbalance in investment teams and unconscious biases.

“It’s really disheartening and disappointing,”

Yang said, expressing her frustration with the slow pace of progress.

“It feels like two steps forward, one step back. And in recent times, particularly in the venture capital space, with the stats that are out there, it feels like we’re taking two steps back before we can take a step forward.”

She challenges the prevailing narrative that places the onus on women to change their pitching styles and become more confident. Instead, she argues that investors must take duty for addressing their own biases and reevaluating their investment criteria.

Yang also highlights the significant economic benefits of investing in women. citing 2019 BCG data, she notes that if women and men participated equally as entrepreneurs, global GDP could increase by approximately 3 percent to 6 percent, boosting the global economy by $US2.5 trillion to $US5 trillion.

Corporate Australia has made strides in increasing female representation on boards, with many companies now having at least 30 percent women. This progress was largely driven by mandatory diversity reporting and investor activism, with investors voting against directors who failed to appoint women to their boards.

Conclusion

The push for mandatory diversity reporting in the Australian venture capital sector reflects a growing recognition of the need for greater equity and inclusion. Inspired by California’s pioneering efforts, advocates like Marisa Warren are calling for concrete action, including quotas and accountability measures, to address the underrepresentation of women-led startups. While some investors are taking proactive steps, significant challenges remain, and a collective effort is required to unlock the full potential of women entrepreneurs and drive economic growth.

Gender Imbalance in Venture Capital: Systemic Issues and Potential Solutions

The venture capital landscape faces a significant gender imbalance, with female founders consistently receiving less funding than their male counterparts.This disparity is attributed to several factors, including the network effect, where established investors primarily invest in ventures within their existing networks, which have historically been predominantly male. Dr. Sharma recently discussed potential solutions, including mandatory diversity reporting and quotas, along with the importance of business plans and networking for women founders.

the Root Causes of the Gender Gap

The underrepresentation of women in venture capital is not simply a matter of chance. Systemic issues contribute significantly to this imbalance. One key factor is the network effect,which favors those already connected to established investors. Because these networks have historically been male-dominated, women often find themselves excluded from crucial funding opportunities.

Furthermore,traditional venture capital models often prioritize high-growth,high-risk investments,a category in which female founders have been historically underrepresented. This isn’t due to a lack of innovative ideas among women, but rather to systemic barriers in access to education, mentorship, and networks that foster these higher-risk ventures.

Mandatory Diversity Reporting and Quotas: A Balanced Approach?

The potential for mandatory diversity reporting and quotas has sparked considerable debate as potential solutions to the gender imbalance. Dr.Sharma weighed in on the arguments for and against these approaches.

Mandatory diversity reporting aims to increase openness and accountability within the venture capital industry,making visible the current disparities. The potential benefits include a stronger awareness of the problem, encouraging firms to actively seek out and support female founders.however, critics argue that simply reporting numbers doesn’t automatically translate into meaningful change.

Quotas,on the other hand,aim to directly address the imbalance by mandating a certain percentage of investments in women-led ventures. Proponents argue that quotas can create a powerful incentive for change, forcing investors to actively diversify their portfolios. The counter-argument is that quotas might lead to a focus on meeting targets rather than investing in the most promising ventures, potentially compromising returns and causing resentment.

A balanced approach, combining reporting with targeted initiatives to support women entrepreneurs, might be a more effective solution.

The Importance of Business Plans and Networking

Securing funding in the competitive venture capital world requires more than just a good idea. A strong business plan and robust networking are crucial, especially for women founders navigating systemic biases.

A compelling business plan remains absolutely critical for any startup seeking funding,regardless of the founder’s gender. It needs to articulate a clear problem, a viable solution, a strong team, and a credible path to financial sustainability. For women founders,though,there’s an additional layer: demonstrating meaningful traction and proven market validation early on could significantly increase the likelihood of securing funding,as it can mitigate some of the implicit biases.

Strong networking is similarly vital. Active engagement in entrepreneurial communities, attending industry events, and leveraging mentorship programs can definitely help women founders build relationships with potential investors and gain access to crucial resources. There’s considerable evidence that access to a diverse network creates increased access to resources.

Broader Societal Implications

The gender imbalance in venture capital has far-reaching societal implications, extending beyond the financial realm. The lack of diversity impacts economic growth and innovation.

Economic growth is one area. Studies have consistently shown that investing in businesses led by women contributes significantly to economic growth and job creation. Moreover, the underrepresentation of women in leadership positions within startups and larger corporations perpetuates a lack of diversity in innovation and problem-solving, potentially leading to missed opportunities and a less representative, and potentially less effective, industry.

Conclusion

Addressing the gender imbalance in venture capital requires a multifaceted approach. While mandatory diversity reporting and quotas offer potential solutions,a balanced strategy that combines these measures with targeted initiatives to support women entrepreneurs may prove more effective.Ultimately, fostering a more inclusive and equitable venture capital ecosystem will not only benefit women founders but also drive economic growth and innovation for society as a whole.