Cut Through Venture’s first quarterly report for 2023 has revealed that funding for women-led startups continues to be a mixed bag in Australia. And one that is largely skewed by a couple of big raises that mask a continued problem. Pause for feigned shock.
In late 2022, Cut Through Venture announced that it would be nuking its monthly startup funding report. Instead, it has moved to quarterly reports, as well as keeping its yearly State of Australian Startup Funding reports, alongside Folklore Ventures.
Its first quarterly report for 2023 just dropped, providing insight into how funding has been in the Australian landscape in Q1.
Unsurprisingly, things have been off to a slow start across the board.
In fact, this is the slowest Q1 in funding land since 2019. At $661 million in total funding during the period, this is 50% lower than Q1 2021 and 20% lower than Q1 2022. Cut Through also pointed out that there has been a drop in both median and average deal sizes during that period due to the sheer lack of mega deals.
The biggest deal of Q1 was Loam Bio, bringing in $105 million in Series B. But the good news here is that Loam is at least women-led.
A mixed bag for women-led startup funding, again
Cut Through’s 2022 State of Australian Startup Funding report showed that things are messy when it comes to women-led startups getting funding in Australia.
Deal participation for women founders hit record levels, with pre-seed deal shares hitting 33% and female founder participation increasing at both the Seed (20%) and Series A (19%) stages.
However, the report also found that the share of total capital that went to women founders declined in 2022. That being said, there were some mammoth raises in 2021 for Canva and Airwallex — both with women founders — that would have contributed to the seeming 2022 decline.
Still, Cut Through Venture’s first quarterly report of the year has shown that this mixed trend has continued into Q1.
“Female founders experienced a promising Q1 rebound, reaching a two-year peak in total funding share. Seed and Series B+ deal shares achieved highs, while Series A share marked a five-year low,” the report reads.
It also points out that this has been largely driven by a few big deals, led by Loam’s $105 million Series B.
“[It’s] responsible for over half of the funds raised by female-led firms. The following two top-raising female-led startups, SMB accounting solution Hnry and methane-reducing livestock supplement producer Rumin8, collectively made up 25% of the total funds raised. Eight all-female founding teams contributed to the $26M raised by all-female founding teams.”
Outliers and empty words
This continues to be the problem. The current economic climate has hit funding across the industry, there’s no denying that. However, women-founded and led startups continue to get the raw end of the deal, if they can even land one. But this goes largely unnoticed, publicly at least, because a few big raises skew the numbers.
These companies absolutely deserve every cent, and to be celebrated, but it’s not enough to adequately move the dial. We can see this by looking at where the majority of funding for women-led startups is going. Outside of a few unicorns like Canva, it’s not happening much past Series B.
Then there are the continued issues with initiatives such as the Boosting Female Founders program. Founded by the Morrison government, it is designed to help “women entrepreneurs overcome the disadvantages faced in getting access to finance.”
The latest round has been on hold for over eight months — leaving over 700 applicants unsure of what is happening or when they will find out if they’ll get funding. It was only after a recent inquiry from SmartCompany — thanks to passionate sources within the startup community — that we found out that there will be no further updates until June.
To make matters worse, this works as a co-contribution scheme, meaning that 700 women-led businesses have been holding onto funding for almost a year in the current economic climate — all in the hopes of getting an extra sliver of the proverbial pie from the Federal Government.
None of this sounds particularly like a sector that is advocating for women in the startup space beyond pretty words that generally fall around March 8. But sure, things seem to be doing well. On paper.