Opinion: AFR’s Young Rich List shows how VC funding is stacked against women

The Australian Financial Review released its under 40 Rich List this morning. It is one of my favourite reads; who doesn’t love a glimpse into someone else’s bank account? But this post isn’t a commentary on the reporting or the merits of the rich list, it’s an observation about the facts of women founders.

Melanie Perkins (extraordinary founder) may be up the top, but she’s the only woman in the top 10.

A screenshot of the top 10 in the AFR Young Rich List. Source: supplied

There couldn’t be a better table to illustrate the following facts.

Women-led startups across the globe attract less than 3% of venture capital funding.

Women who receive startup funding from other women are less likely to receive further funding from traditional VCs.

Women may pay an unexpected price for same-gender support. Women-founded businesses that received funding from female VCs are two times less likely to raise additional funding than women founders who were funded by male VCs. For male-founded firms, there was no such effect. The male founders were equally likely to receive future funding regardless of whether their first-round funding came from male or female VCs.

The only way to address this is to engage in public advocacy on the issue and change the institutional patterns and thinking that prevent VC firms from recognising the great potential of all ideas presented to them.

Currently, only about 12% of decision-makers at VC firms are women, so substantially more women would need to enter this field to bring about change in traditional VC funding avenues.

The disproportionately adverse impact on women’s careers throughout the pandemic is well documented, and this extends to capital raising. Since the pandemic there has not been a decrease in overall VC funding, however, since 2019, there has been a substantial drop in venture capital funding for women-led startups.

When seeking capital or fundraising, female-founded enterprises suffer from “pattern matching habits”, where VCs fund what they usually or normally have and are risk-averse to funding “others”.

What they “normally” see are not women and not mothers.

This is an edited version of a post that was first shared on LinkedIn. 

Sally Branson Dalwood is the director of Sally Branson Consulting, founder of The Suite Set, and co-founder at FOMO Alerts.