Building barriers or creating space? A closer look at the Boosting Female Founders Initiative’s tight eligibility criteria

Neighbourlytics

Neighbourlytics co-founders Jessica Christiansen-Franks and Lucinda Hartley. Source: supplied.

This is the second article of a two-part series. Read part one here.

The government’s Boosting Female Founders Initiative comes with some pretty strict eligibility criteria attached.

You can read more about the specifics in part one of this series, but, essentially, by requiring startups to be at least 50% owned by women, the scheme excludes any business with a male co-founder that has also secured investment from a male-led organisation.

The size of the problem

Judging purely by her own circle of startup connections, UpCover co-founder Skye Theodorou estimates that about 80% of women-led startups wouldn’t qualify for the Boosting Female Founders Initiative (BFF Initiative).

That’s tricky to verify. But, at least in terms of how many startups have a founding team that’s at least 50% women, we’ve done the numbers.

SmartCompany reached out to Murray Hurps, director of entrepreneurship at the University of Technology Sydney and co-founder of Startup Muster.

Startup Muster was an annual survey of the startup ecosystem, until it lost its government funding in early-2019. Getting more women into that ecosystem is something Hurps is passionate about.

Hurps took another look at the data for 2018, when the last survey was conducted, to dig out some stats that weren’t in the report.

At that time, 31% of startups surveyed had at least one woman on their founding team.

Just shy of 25% had a co-founding team that was at least half women.

In 2018, 12.3% of Aussie startups had a founding team that was more than 50% women, and 10.5% had women-only founding teams.

Compare that to the 69% which, by process of elimination, must have exclusively male founders, and it’s a pretty bleak picture.

So, is it the case that startups with more than 50% women founders need support more than those with an equal leadership split?

Zoe Piper, the founder of Ethitrade International, believes so.

“My view is that if you’ve already got a male co-founder and successfully raised capital from investors, then you already overcome some of the key barriers majority-women-owned businesses face,” Piper tells SmartCompany.

There are plenty of grant packages and other support schemes that don’t take gender into account, she notes.

“Please don’t make it any harder than it already is for majority-women-owned businesses, by also trying to compete for these funds.”

Piper points to the sheer number of applications the scheme received even with the criteria as it is, showing that demand is there nonetheless.

And she says she personally knows of women-led businesses with high-growth potential that didn’t make it past the first round “because the competition is so fierce”.

Support at the next step

But not all majority-women-led businesses feel the same way.

Jessica Christiansen-Franks heads up urban data startup Neighbourlytics alongside co-founder Lucinda Hartley.

Christiansen-Franks acknowledges that women-founded startups typically attract less funding than their male-led counterparts, and that this is the issue the BFF Initiative is trying to address.

But even for a business with two women at the helm, she says it doesn’t quite hit the mark.

“If you believe the stereotype that females don’t get funded as much, then a business that has only female founders would be at a disadvantage,” she acknowledges.

“But, I think the Australian innovation system has become a lot better at that entry-level [funding] over the past couple of years,” she explains.

While the Aussie investment landscape in Australia is still largely male-dominated, there are actually more programs than ever tailored to help women-led startups secure early-stage funding.

What’s missing is the next step.

“We need to get to the point of being able to get Series A, Series B. And the further along that maturing process we get, the less ownership stake we have, and the less the leadership is going to look female,” Christiansen-Franks explains.

“By being so narrow on their female-foundedness, they miss that growth opportunity.”

This particular grant program opens the door to early-stage startups. But it doesn’t go much further.

“Opening the door is not good enough if it doesn’t also think about how to nurture our businesses through the very complex and still very monocultural entrepreneurial or innovation industry in Australia,” she adds.

Facing up to reality

In the grand scheme of things, there isn’t a huge amount of funding up for grabs here.

But, it sets a precedent that having male investors makes a startup ‘less women-led’. That feels problematic, and out of tune with the sector women are actually working within.

“Government grants should never be penalising any woman for having accepted money from a majority-male investor … because that’s the reality,” Theodorou says.

“That’s just how it works.”

UpCover excluded Boosting Female Founders Initiative

UpCover co-founders Skye Theodorou Anish Sinha. Source: supplied.

Christiansen-Franks also questions the incentive the grant creates. Should women be actively seeking women backers, in a bid to remain eligible for grant programs like this one? That’s just not practical.

“The investment journey is hard enough anyway,” she says.

“Is it trying to create an incentive where women are further stereotyping ourselves by continuing to have to identify gender at every step?

“Why am I a female founder first?”

When asked whether the Department of Industry would consider revising the eligibility criteria, the government spokesperson we spoke with didn’t respond with a flat ‘no’.

The department is taking a “continuous improvement” approach, and will review the initiative when the first round is completed.

“This will inform any changes that may be needed to improve delivery of the initiative,” the spokesperson said.

However, they did seem to double down on the ‘majority-owned’ element.

“The core objective of the Boosting Female Founders Initiative is to support majority-women-owned and -led startup businesses to access the capital and advice they need to grow,” they said.

Women vs women?

Among some of the women we spoke with, there’s a feeling that this creates a divide between startups that are either more woman-led or less so.

In an environment where all women are underrepresented — women from marginalised groups even more so — the last thing they need is to be pitched against each other.

“That’s very problematic,” Christiansen-Franks says.

“If the goal is women entering entrepreneurship, whether you’ve got a male co-founder or not, that’s still being achieved,” she explains.

This is an exercise in optics, making it appear the government is backing women, she suggests. To go beyond lip service, we need to think outside of the box.

Rather than backing businesses based on ownership, she would like to see grants that consider how many women are working on R&D projects, for example, or in technical and engineering roles.

“That way, the conversation is more sophisticated,” she says.

Bringing women into tech is about more than women-led businesses. It’s about bringing women in at all levels.

Until recently, all of Neighbourlytics’ engineers and analysts were women. If one of the co-founders happened to be a man, it would still be doing its part, Christiansen-Franks says.

“It would be absurd for us not to be included for that reason.”

On the other hand, Piper doesn’t see the scheme as creating any more of a divide that was already there.

“If there were no other sources of funding available then perhaps you could argue that the criteria need to be relaxed, but that isn’t the case here,” she says.

Smashing one barrier and building another

For Theodorou, this saga has a happy ending.

She’s found a way around the BFF’s tight criteria, and has reached the second round of the application process with a business she has 100% ownership of — a subsidiary of UpCover.

“I was trying to find every single way I could possibly apply and be eligible,” she says.

But, it’s fair to assume a lot of women could have done the same thing and didn’t. After all, that’s just another hoop to jump through.

“How many women didn’t apply?

“They would have had thousands more applications that would have been eligible, if they’d just changed the criteria,” a frustrated Theodorou says.

For women, there are enough barriers to entry to entrepreneurship already, she says. This grant just becomes another one.

“What women need is things that knock down those barriers, and knock down all of the reasons why you shouldn’t or why you can’t, to become things that actually enable you to get ahead.”

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