3rd December, 2021
Techboard recently released its inaugural Female Founder Funding Report, analysing statistics, trends and trajectories in female-founded startups.
Gender diversity in business has been at the forefront of conversation for a while now, with issues such as the gender pay gap, equality in recruitment processes, and equitable access to capital funding being scrutinised more closely across the board.
Techboard, an organisation that’s devoted to analysing trends and statistics in the Australian startup ecosystem, recently published a report into all things relating how female-founded startups are being funded.
Aside from placing the topic of equitable access to capital funding in Australia under a microscope for the first time, the report also made clear that there is much room for further analysis when it comes to female founder funding and, more broadly, gender diversity in startups.
Before getting into the nuts and bolts of the report findings, it’s important to understand where the report received its data from, and how it defined the various terms that it used to classify the datasets.
For the purpose of the report, Techboard considered both solely female founded and mixed gender founding teams to be ‘female-founded’ businesses and defined the term ‘startup’ as companies that either “have proprietary technology or intellectual property at the core of their product or service offering”, or that are “high growth potential” businesses.
The datasets that Techboard used for the report were sourced from its own company profile directory that has over 4,300 companies, funding events, investors, and through the identification of company founders.
The type of funding that was covered in the report was that which was raised through accelerator programs, acquisitions, crowdfunding campaigns, debt, government grants, initial coin offerings, IPOs, reverse takeovers, ASX placements, and of course, venture capital (VC) funding.
The report covered four years’ worth of funding, spanning from 1 July 2017 right through to 30 June 2021.
The data analysis was divided into a number of key subheadings, each of which focusing on a different component of the way startup funding was distributed to startups with female founders during the reporting period.
These subheadings included distribution by percentage, funding type, location, deal size, deal label and startup vertical.
Data relating to the top funding events that took place over the period, as well as matters relating to gender diversity from an investor standpoint were also covered in the report.
Here is an overview of some of the key findings that are covered across the five subheadings relating to funding distribution.
According to the report, startups with a female founder secured over six billion in funding over the course of the four-year period covered, representing 23.72 percent of total funds raised across the entire ecosystem.
Within this 23.72 percent, only 4.01 percent reached startups that were solely female founded.
When the two streams of startups were combined and viewed on a year-by-year basis, the report showed a substantial upward trend across the whole reporting period, not withstanding a drop from 37.07 percent recorded during the 2020 financial year, to 17.04 percent in 2021.
Of all the different funding types covered by the report, VC investment was the clear leader in the distribution of funds to female founded companies – with 63 percent of the total funding raised by such companies being attributable to this form of investment. Distribution of funding through debt financing and public investment followed.
To qualify the data relating to funding distribution via debt financing, the report highlighted that the entire sum of debt funding raised by female founded startups was exclusively for the Financial Technology (fintech) vertical and raised across three companies.
A trend that emerged from the report was that the 2021 financial year saw a substantial reduction in VC funding being distributed to female founded companies, with the combined funding proportion dropping from 44.38 percent to 29 percent. While this trend does appear concerning at face value, the report attributes the discrepancy to a significant increase in deal value being distributed to male-founded startups.
When looking at the funding distribution data on a state level, Victoria emerged as the state with the largest amount of funding being funnelled to female-founded startups. Interestingly, South Australia emerged as a close second, followed by New South Wales, then Queensland, Western Australia, and lastly, the ACT.
Techboard did not include data relating to Tasmania or the Northern Territory as part of its report, as the data available for these states was not substantive enough to warrant analysis.
Despite Victoria leading the way from a ‘quantum of funding’ standpoint, from a ‘number of deals’ perspective, New South Wales ended up being slightly ahead of Victoria.
There are two ways in which a capital raise is generally measured: the size of the raise (meaning, up to $1 million, $1M-$5M, and so on), and the label of the raise (pre-Seed, Seed, Series A, and so on).
A notable statistic that emerged from this section of the report was that the deal size bracket of $20 million to $50 million was almost completely devoid of female founded startups, with none appearing throughout the 2018 and 2019 financial years.
Additionally, from the deal label side of things, half the representation of females secured up to the Seed investment level, with the dataset revealing a reduction from Series A and beyond.
The final subsection of the report that covered quantum of funding funnelled to female founded startups examined the data relating to the various verticals and categories that exist within the Australian startup ecosystem.
Irrespective of the genders of the founding teams, the fintech vertical emerged as the most funded space across the four-year period, followed by health and biotech.
Outside of those two verticals, the gender of the founding teams altered the verticals. For female-founded startups, advertising and marketing technology, and artificial intelligence were next in line, followed by people solutions, agribusiness technology, energy and cleantech, and more.
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When speaking to The Pulse about the report, Peter Van Bruchem, chief executive of Techboard, said that of all the statistics and trends that emerged from the analysis, the number of drops in female funding that occurred in the 2021 financial year across all of categories analysed was the most impacting.
“We’re hopeful that some of these negative turns that took place throughout COVID-19 and widespread lockdowns will be reversed in the current financial year and beyond,” Van Bruchem said.
To provide a more focused analysis going forward, Van Bruchem said that his organisation would begin reporting on female founder funding on an annual basis.
“We hope to provide an even more comprehensive and detailed analysis of this particular space at the culmination of this financial year, including the analysis of the links between investment initiatives and actual funding.”