Investors overwhelmingly backed all-male startup teams in 2023

Investors overwhelmingly backed all-male startup teams in 2023

Just 4 per cent of startup funding went to all-female teams in 2023, with all-male teams continuing to dominate across all deals done.

All-female founded startups secured a tiny four per cent of the $3.5 billion in startup funding in Australia in 2023, with all-male teams taking the vast majority of the 413 investment deals done.

Sixty two per cent of funding deals went to all-male founding teams, compared to 12 per cent for all-female founding teams and 26 per cent for teams involving at least one female founder.

The figures from the latest State of Australian Start-up Funding Report released today highlight how much the Australian startup ecosystem is missing out on by largely failing to include one-half of the population.

These dire numbers again point to signs of a sick startup sector in Australia.

Indeed, when just four per cent of investor capital goes to all female founding teams and just 18 per cent of funds raised go to mixed-gender teams, we can’t pretend to believe that we’re getting the innovation, technological advancements, competitiveness and best ideas that should stem from a healthy startup ecosystem. We also can’t hope to achieve the social impact and development that such an ecosystem could support.

These new figures show that investing in startups is still largely a men’s game, despite increasing rhetoric on the need to invest in women, and despite the excellent ideas and proven results of women launching businesses that have great impact and returns.

Incredibly, that four per cent is actually an increase on the previous year’s figure.

But that four per cent is concentrated across just a handful of deals. In 2023, half of all funding secured by teams with at least one female founder was shared between just five startups: Constantinople, Secure Code Warrior, Silicon Quantum Computing, Loam and Fleet.

The median size of deals for all male teams was $3 million in 2023, compared to $0.7 million for all female-founded teams and $1 million for mixed-gender teams. This trend has been going on for years. Since 2019, there have been only three funding rounds by all female founding teams worth more than $50 million, representing just 2.5 per cent of such funding rounds. Seven such teams have completed funding rounds worth more than $20 million, representing 2.1 percent of all rounds in that category.

While there is more movement on investors recognising and talking about these issues — and a win in that 58 per cent of the 50 most active investors in Australia invested in a startup with a female founder, compared with just 28 per cent in 2022 — it’s difficult to overlook the fact these figures mean 42 per cent of these active investors did not invest in a woman at all in 2023.

So what are investors doing about the imbalance? Not enough, according to the survey of investors included in this report.

Seventy-two per cent of investors reported they are looking at “ensuring diversity within investment team”, while 34 per cent say they are partnering with diversity-focused accelerators and incubators. Just half (51 per cent) said they are sourcing deals from networks focused on underrepresented entrepreneurs, and just 50 per cent said they have collaborated with industry to promote diversity and inclusion. Less than a third (27 per cent) have policies to ensure diverse representation management and boards within their portfolios. Fourty one per cent are still not recording and analysing the diversity metrics of applicant founders.

There were some small upticks for women in this report. First, 18 per cent of equity capital went to teams with at least one female co founder, an increase on the previous year’s figure, at just 10 per cent. And 26 per cent of all deals done involved at least one female co founder, up from 23 per cent on the previous year.

Founders have big ambitions ahead. Eighty two per cent of the women founders surveyed said they plan to raise capital in 2024. We wait to see what happens next and how investors will better consider diversity in their portfolios.

Meanwhile, some initiatives are emerging to push for transparency and potential targets in investment portfolios.

More than 50 firms have committed to publicly disclosing data on how many female-led businesses they have screened, vetted, and funded. Led by Scale investors, Alberts Investment and Giant Leap, they’re on a mission to enlist at least 100 Australian firms.

This is the third edition of State of Australian Startup Founding Report, jointly published by Cut Through Venture and Folklore Ventures. This year’s version highlights a significant drop in overall funding for startups, down from $7.4 billion in 2022 to $3.5 billion in 2022, which reflects an overall global downturn in such funding.

The report notes that artificial intelligence is the most anticipated sector for 2024, while strong interest remains for enterprise/business software as well as climate tech/cleantech.

Pictured above: Tegan Nock, co founder in the agritech business Loam, which achieved one of the five largest rounds involving a female founder in 2023.


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