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The power to move the needle: Why gender inequality survives in VCs, according to NAB Ventures’ Melissa Widner

Stephanie Palmer-Derrien /

NAB Ventures general partner Melissa Widner and managing director Todd Forest. Source: Supplied.

NAB Ventures general partner Melissa Widner and managing director Todd Forest. Source: Supplied.

In Australia, there’s arguably more support for female-founded startups than ever before, and with female-focused events, meetups and accelerators on offer, the dial is shifting towards a more gender-balanced ecosystem.

But, there’s still one bastion of inequality in the startup space — and that’s venture capital.

In Australia’s corporate venture funds, NAB Ventures’ Melissa Widner is the only female at a partner level in the whole country.

When Widner co-founded Head Over Heels in 2010 — an organisation supporting female entrepreneurs through providing access to business networks — after emigrating to Australia back in 2009, there wasn’t a whole lot of talk about women in startups. Over the last two or three years, however, it’s become “a very hot topic”.

“There’s a lot of progress that can be made because corporations are paying attention,” she says.

But, while there’s attention on female-run startups and business owners, it hasn’t quite translated to VCs, Widner says, and that’s a real problem.

The balance of power

At NAB as a whole, the percentage of female senior executives is “in the 30s”, Widner says, but this is because there’s an appetite for change.

Not only is it “the right thing to do”, Widner says, but “customers demand it”.

Equally, according to the Australian Institute of Company Directors, the percentage of women on the boards of companies on the ASX 200 has increased from 8.3% in 2009 to 28.5% as of August 31 this year.

Widner partly attributes this to the requirement for these companies to disclose diversity statistics, which came into effect in 2011.

“If we had no women senior executives and [our competitors] did, we would lose a lot of customers,” she says.

Change follows demand from the people holding the power. And in most cases, that’s the customer.

In VCs, this customer is the limited partner investing into the VC funds, which in turn invest that capital into startups and, eventually (in theory) generate returns.

To state the obvious, the power doesn’t lie with the startups here. They usually can’t afford to be picky about who they pitch to or accept capital from.

“It’s so hard for an entrepreneur to raise money, you can’t put a criteria on it,” Widner says.

The limited partners, on the other hand, are typically large institutions, occasionally high-net-worth individuals and, increasingly, super funds.

According to the Association of Superannuation Funds of Australia, assets in super funds totalled $2.7 trillion at the end of June 2018.

“They really would have the power to really move the needle on this,” Widner says.

If powerful limited partners started to take gender diversity into consideration when choosing which funds to invest in, “you can bet these [VC] funds would really quickly find qualified women”, she adds.

“Somebody needs to take on this initiative and get the superannuation funds behind this.”

Right now, of the 68 venture funds listed in Artesian’s guide to the Australian startup and VC ecosystem, including seed, early-stage, late-stage and corporate VC firms, you can count female partner-level decision-makers on your fingers, Widner says.

A lack of female representation at VC partner level is a “huge problem” that is “not getting better”, she adds.

Women in the spotlight

The lack of women in VCs is perhaps not immediately obvious. There are a handful of high-profile women in VCs — including Blackbird partner Samantha Wong and Square Peg’s head of community Imogen Baxter — who have been fairly vocal in advocating for women in the startup space, including driving a sexual harassment code of conduct signed by five of Australia’s biggest venture capital firms.

But the existence of public figures does not mean equal representation exists behind the scenes too. Rather, women are more likely to be invited to contribute in public places than their male counterparts. NAB Ventures has three associates and, according to Widner, the two women on the team are asked to speak on panels and at events much more often than the one man.

“People are so desperate to get women out there,” she says.

And, it’s not necessarily that there are no women in the VC space as a whole, Widner says. They’re just not at the decision-making level.

In fact, at a recent panel at the University of Technology Sydney, female investment managers and associates laid out some of the things they’ve learnt through VC investing.

Panellists also debunked the myth women are more risk averse in their investments — and the idea risk aversion is necessarily a bad thing.

Connie Lee of Tempus Partners noted different levels of risk aversion lend a “different dimension to investment discussions”, while Reinventure’s Lisa Fedorenko noted the more diversity within a firm, the better outcomes you’re likely to see.

VC investment is “the least groupthink-style job you can find”, Fedorenko said.

However, where in a space such as private equity, being an associate would put you in line to become a partner, that’s not necessarily true in venture capital. In venture, Widner says, partners are more often former chief executive officers and startup founders themselves.

“It’s better having women associates [than not], but we need to see more women at the partner level,” she says.

Countering unconscious bias

That said — whether there are women involved or not — there is always an unconscious bias when investing venture capital, Widner says.

Investors are “looking to recognise patterns of successful people”, and it’s easy to become attached to one idea of what a successful entrepreneur ‘should’ look like. For Widner, based on her own experience as a successful founder, this should be a woman. But it’s not.

“The picture of a successful entrepreneur is more often than not a young guy,” she says.

It’s a difficult thing to counter — VC investors say no to startups all the time for “a million reasons”.

“A lot of them, you don’t even know why,” she says.

But it’s not all doom and gloom, and the tide is turning. Successful startup founders such as Canva’s Melanie Perkins and Airwallex’s Lucy Liu are starting to change the perception of what an entrepreneur looks like.

“Now, that will become what a successful entrepreneur looks like and people will be looking to fund that,” Widner says.

“We need more and more role models — it’s easier to be what you can see,” she adds.

“Pretty soon it won’t matter, hopefully, because we’ll be used to seeing all kinds of successful entrepreneurs and the unconscious bias goes away.”

At NAB Ventures, Widner and the team have started tracking the numbers of pitches they had from female founders, as well as the numbers of women in its portfolio companies, and gender diversity on their boards.

Just paying attention to the numbers goes some way to addressing that unconscious bias, Widner says, even though “we don’t have any quotas”.

“It’s a great time to be a female founder, because there is so much support around,” Widner adds.

“Australia is really way ahead of a lot of other countries — the Male Champions of Change movement was born here in Australia.”

However, female entrepreneurship might not stay in the limelight forever, and it’s important to get “a lot of runs on the board” while it lasts, Widner says.

And at the end of the day, “nothing is ever going to change if we don’t have women making decisions on how the cheques are written,” she adds.

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Stephanie Palmer-Derrien

Stephanie Palmer-Derrien is a reporter at StartupSmart.

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