Women breaking through the roof of technology
AirTree approach It goes against industry standards, where men easily make more money than women, but perform worse.
Research conducted by the Boston Consulting Group in the US revealed a gender gap in investment between males and females seeking start-up funding.
Female startups get better over time
BCG looked at 350 startups in the US in 2018 and found that companies founded and co-founded by women generate significantly better financial returns.
“Investments in companies founded or co-founded by women averaged $935,000, which is less than half of his average investment of $2.1 million in companies founded by male entrepreneurs,” the report states.
“Despite this disparity, women-founded and co-founded startups have performed better over time, achieving a 10 percent cumulative revenue increase over a five-year period: $730,000 compared to $662,000.”
AirTree Ventures, which stood out from its peers due to the gender balance of its six partners, was quick to recognize the potential in Canva, founded by Melanie Perkins, Cliff Obrecht and Cameron Adams.
“Even in the past when we invested in 2014, there was an undeniable pull — you can see user growth, it’s going up significantly, month by month, and they didn’t pay for that growth — it was all driven by word of mouth,” Fuling said.
She says Canva’s vision of “democratizing access to design” fits perfectly with the rise of social media and people’s move away from complex and costly products like Photoshop.
Amazing profits in the future
The fact that AirTree has invested in every Canva fundraising round since 2014 means it will turn a staggering profit when the company eventually lists on the Nasdaq in New York.
Another venture company that will enjoy huge profits from Canva’s success is Grok Ventures, the private investment firm of Mike and Annie Cannon-Brookes.
I quickly deduced wisdom from hiring female investment professionals who could find outstanding startups founded or co-founded by women.
Lucinda Hankin, director of private equity at Grok, told the Morgan Stanley Summit that 60 percent of the dollars distributed in Grok’s start-up portfolio is in business with one institution or co-founder.
Bright is one of Grok’s most successful investments, a zero-interest solar and battery finance company that has agreed to fund about $500 million across 60,000 households.
There is real precision, real depth in understanding the issues, and real empathy for the customer [among female founders].
– Lucinda Hankin, Grok Ventures
Hankin says Brighte’s founder and CEO, Catherine McConnell, deeply recognized the market opportunity of decarbonizing domestic electricity supplies, and “showed great determination and hustle”.
“She actually left a great job at Macquarie and took out a mortgage on her home to launch Brighte,” she says.
“The broader impact of what Bright catalysed is huge. In 2020, micro-solar power was responsible for approximately 24 per cent of Australia’s clean energy generation and produced 6.5 per cent of Australia’s total electricity.”
Emma Jane Newton, who led the panel discussion at the summit and is the first female managing director at Morgan Stanley in Australia, says startups co-founded by women in Australia received 20 per cent of venture capital funding in the first half of this year, up from about 15 percent in previous years.
Change in thinking required
She says there are some frustrating statistics about women making money in ventures and private equity.
“Venture capital has partners that are 15 percent women,” Newton says. “PE has only 3 percent of partners who are women. One third of private equity funds do not have female investment professionals.
“There is still ample opportunity for increased funding and investment by women for women.”
But this will require a fundamental change in thinking.
There is a certain male archetype that bold investors have identified and supported for years and who look a lot like male founders in the past, Hankin says.
“I have been among some of the best founders, especially women founders, and I will note that there is real nuance, real depth in understanding the issues, and in fact, real empathy with the client,” she says.
When we look at structural barriers, it’s important not to talk about sex alone.
– Sally Ann Williams, CEO, Cicada Innovations
“VC is really about supporting outliers, and with the likes of Canva, Brighte, Airwallex and others, I think we are seeing a generation of co-founders or co-founders emerge as successes.”
Airwallex, a global payments fintech company and Australia’s fastest growing fintech companyCo-founded by Lucy Liu.
Other tech founders and co-founders include Flavia Tata Nardini, Co-Founder of Fleet Space Technologies, Lucinda Hartley, Co-Founder of Neighbourlytics, Yasmine Grigalionas, Co-Founder of World’s Largest Garage, Noel Smit, Co-Founder of Teamgage, Bridget Loudon, Co-Founder of Expert360 , Ilana Fein, founder of Nano-X, Ross Harvey, founder of The Yield, Shahira Gardner, co-founder of Finch, Gemma Green, co-founder of Power Ledger, and Lucy Lloyd, co-founder of Mentorloop.
Hankin says it’s positive that Australian venture capitalists appear to be doing a better job than the rest of the world supporting start-ups founded or co-founded by women.
“I think there is a lot of room for improvement, but there are some positive signs of what lies ahead,” she says.
We need to remove structural barriers that prevent women from fully participating in the workforce, says Sally Ann Williams, CEO of Cicada Innovations, Australia’s leading deep-tech incubator.
“If we have great childcare systems, we have better educational outcomes for children — and that means better knowledge, a better economy, and a better future workforce,” she says.
“When we look at structural barriers, it is important that we not talk about gender alone. If we are to thrive in the economy and find future solutions to some of the biggest crises we will face – not just the climate – this is vital.”
Beware of women-free management teams
When she was at Google, Williams says, she was pushing male engineers to take a year’s paternity leave.
And the engineers who did, she says, understood that “the first few years are actually very beneficial for the long-term educational and educational outcomes and opportunities, and ultimately the economic opportunities for that child.”
Justin Ryan, who supported cosmetics startup Adore Beauty Group and Modibodi when he was a managing partner at Quadrant Private Equity, says he’s always been wary of companies without women on their management teams because diversity brings better returns.
When she underwent the Springboard Accelerator program, none of the male venture investors viewed her work because of their conscious bias, says Kristi Chung, CEO and founder of Modibodi, a company that provides leak-proof underwear for women.
But its business has outperformed all other businesses in the accelerator program in terms of key financial metrics.
Chung says Ryan supported her business after talking to all the women in his life to understand how the product would be used and how it would be received by females.
“I think venture capital is overlooking a huge community of women because 30 per cent of the business in Australia is owned by women,” she says.
Her advice to the 85 percent of men who run venture capital firms and 97 percent of those who run private equity firms is:Get more women in your teams. “