Entrepreneurs will be vital in our COVID-19 recovery efforts — for our economy and maintaining our quality of life.
As the ecosystem comes together to tackle current challenges and re-imagine our future, it is essential that these efforts build a level playing field through greater inclusivity and equality.
The under-representation of female entrepreneurs in the startup ecosystem is well-documented, and while the recent Startup Muster report showed a slight increase in female founders in Australia in 2019 — at 22.3%, with male founders at 77.1% — there is clearly a long way to go.
In 2019, Crunchbase reported that about 20% of 2018’s venture funding went into companies with at least one female founder, although this drops to 12% when removing a $14 billion outlier round — for Ant Financial, founded by Peng Lei, a female billionaire in China. The number drops further to 4% when considering only female founding teams.
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What’s behind this disparity?
Reports, such as that by the Wade Institute, acknowledge a range of barriers for female entrepreneurs, that includes unconscious gender bias, lack of visibility, less capital and fewer professional networks, lack of research and reporting, underrepresentation in high-growth industries and lower confidence.
The Australian higher education sector is an important pipeline that the Australian entrepreneurial ecosystem could tap to level the playing field. All 39 member universities of Universities Australia have startup hubs; with the diversity of female students studying across these universities at 58.3%.
University entrepreneurship and accelerator programs are perfectly placed to mentor and nurture female talent. Our campuses provide a suite of entrepreneurship training activities, opportunities for multidisciplinary perspectives to come together, and seed funding to enable our budding founders to grow and test their ideas.
Furthermore, a number of institutions have introduced targeted programs aimed specifically at supporting female students to build confidence, professional networks and an entrepreneurial mindset.
Higher education is not only where talent graduates from — it’s also where intellectual property is commercialised and innovative technologies developed.
A 2019 OECD report highlights startups “founded by PhD students and academic researchers are significantly more likely to patent than non-academic startups”.
The Australian government has responded to the need to diversify the Australian entrepreneurship ecosystem, and in March 2020, the Boosting Female Founders Initiative opened its round one expression of interest. Through the program, $18 million of grant funding is available to female founders to access finance to grow and scale their startup.
Diversity is the key to innovation.
This is not only an issue of equity, but rather, a smart business decision for national prosperity.
Boston Consulting Group evaluated 350 companies that had been part of the MassChallenge program. The study revealed that, for every dollar of investment raised, female-run startups generated 78 cents in revenue, whereas male-run startups generated only 31 cents. Women outperformed their male counterparts despite raising less money — $935,000 versus $2.12 million.
Though early-career startups show female founders outperforming their male counterparts, it does get worse the further up the money chain you go for women to support women because of the venture capital glass ceiling.
A 2018 Harvard Business Review article analysed 28 years of data and also found that only 8% of investors are women.
Canadian-founded company SheEO acknowledges the need to invest in female founders globally who are working on the ‘world’s to-do list’. Successful women in leadership roles become activators providing finances and mentorship to operate as a pay it forward for up-and-coming female-founded startups.
We do have a gender imbalance in the startup ecosystem, and universities can play a stronger role in overcoming this challenge. As we re-define and re-build our sectors following the pandemic, our ecosystem will benefit from the inclusion of more talented female founders. Right now, Australia needs to harness all her talent.
Three ways the higher education sector can support female founders
Mentor emerging female talent.
Address systemic issues by ensuring a broader cohort of women build their entrepreneurial skills and mindset while at university. Hire female entrepreneurs-in-residence and successful founders to teach programs.
Build a global mindset for female founders.
Support programs that enable female students to experience global ecosystems through startup internships that spark the ideas, networks and skills that result in successful startups.
Invest in seed funding for female-led startups.
Boosting support for startups at a crucial stage of growth through accelerator programs.