Women in Startups – BRW Interview
Women in Startups – BRW Interview
Great interview with Melissa Widner of Heads over Heels/ SeaPoint Ventures, Wendy Simpson Chair of Springboard and myself about women in tech. Thanks Ben Hurley.
Nothing ventured, nothing gained: The networks that are finding the funding to grow women’s start-ups
Last year’s prominent Silicon Beach study of the Australian start-up ecosystem contained a revelation that few found surprising: only 4.3 per cent of Australian tech start-up companies are founded by women. That finding gives Australia’s tech entrepreneur scene a lower representation of women than male-dominated industries like mining, where about 14 per cent of managers are women.
Among the growing community of female entrepreneurs there were some reservations about the way the Silicon Beach report’s four male authors buried this finding right at the end, and explained it with the comment: “It appears that the concept of a start-up venture still has little appeal to Australian females.” Said one woman entrepreneur who didn’t want to be named: “I suspect they just don’t know where to find the women.”
That women aren’t interested is an easy conclusion to make by looking around the room at co-working spaces or angel investor pitching nights, where female participants are the minority, and female investors are even scarcer. It’s a state of affairs that frustrates Melissa Widner, an angel investor with the Sydney Angels network.
“I’m usually one of only a few women at the Sydney Angels meetings,” Widner says. “They have made a concerted effort to bring in more women investors so it’s not like it’s closed.”
Widner is co-founder and chairperson of the Heads Over Heels women’s business network. She says the reasons for the poor female turn-out are more complex than a lack of motivation. Women make up a third of all small-business owners and founded the majority of small businesses in Australia over the past five years, according to a 2012 Bankwest business trends report.
Heads Over Heels and others such as US-based incubator Springboard Enterprises are asking why, with so many women entrepreneurs, there are so few making it big.
“One of the reasons women aren’t growing companies at the same rate as men is they aren’t as strongly connected to funding sources and important strategic partners,” Widner says. “Men have stronger business networks than women do when it comes to funding and big business, which companies need a relationship with to get off the ground.”
Heads Over Heels is backed by a number of big names in business. Widner is a general partner at US-based venture capital firm SeaPoint Ventures and has led a number of successful US venture-backed technology companies. The Heads Over Heels advisory council includes public company heavyweight Diane Grady, OneVentures managing partner Michelle Deaker and Aussie Home Loans chief executive Stephen Porges.
It meets three times a year giving screened companies a chance to seek introductions with big corporations and business people around the world. The scene is vibrant and collegial.
“Head Over Heels membership is comprised of people we call uber-connectors – those who are passionate about entrepreneurship and want to see these statistics change,” Widner says. “They have great networks and are willing to share them selectively with our CEOs.”
Those to present include former investment banker Ghazaleh Lyari, whose cup-cake company Ghermez secured an order with a large entertainment company thanks to a Heads Over Heels introduction.
Three of four investors from a successful Sydney Angels funding pitch were Heads Over Heels members.
Another member, Pascale Helyar-Moray who founded customised jewellery business Style Rocks, received an introduction with a major retailer through the network.
Getting more women into the venture-backed start-up scene isn’t just about doing the right thing.
A Dow Jones VentureSource report, “Women at the Wheel”, last year found the likelihood of a venture-backed company succeeding increased with more female executives at the vice-president or director level.
Natasha Rawlings, co-founder and chief executive of tech start-up StreetHawk, says the lack of interest women seem to show towards coding means many businesses start with male foundations, and continue from there on a male-oriented trajectory, even when it comes time for investment companies to piece together a management team. This is despite women having unique skill sets to offer.
“I have two tech co-founders who are men and realised they needed balance on the team, but I don’t think that’s the norm,” Rawlings says.
She is a non-tech founder of the company, which helps retailers connect to nearby shoppers through their smartphones, and brings to the table her marketing experience.
“If you look at accountancy and law, 50 per cent or a bit more of the intake is women to those sorts of roles,” she says. “Almost all the marketers I’ve worked with have been women. You can think of almost anything except for coding and say there are women there in equal numbers.”
She also claims an expertise in shopping, and questions the ability of male investors to recognise an early-stage business that has the potential to have widespread appeal for women. This is a problem when women are the world’s biggest emerging market, dwarfing China and India, according to major corporations like PepsiCo and supporting research by the Boston Consulting Group.
“Who drives shopping? It is women,” Rawlings says. “We buy most of the household goods still and are responsible for where most of the discretionary income goes. But men don’t like shopping, and I’m thinking if you don’t relate to my business you’re not going to open up your wallet for it.”
Rawlings was one of eight Australian start-ups to go through the first Springboard Australia mentorship program. The US-based program has helped female-founded US companies raise more than $US5.8 billion of funding, and this is its first year in Australia. It will involve a six to eight-week program where an advisory council will help make the businesses investment ready, and refine the pitch to investors. This is important because Rawlings says she believes women are often less comfortable being confident and forthright about their achievements in interview situations.
Says Wendy Simpson, chair of Springboard Australia: “There’s a lot of talented women entrepreneurs that are outside that VC game, and we have to bring them into the game. We’ve got to say to women it’s possible to use other people’s money to build your business. One reason women aren’t getting the money is they’re not asking for it. And when they do ask for it, they’re not asking for enough. So we’ve got to say to them, add another zero.”
She says there is a growing number of successful business people with money who are disillusioned with fund managers after their experience during the financial crisis and who are thinking of ways to invest their money.
“If they made a few well-placed investments they could really accelerate all this,” Simpson says.
Tess Julian, creator of the Hargraves Innovator Recognition Program, says there is a narrow perception of innovation, with government assistance and investment funds geared towards the technology-based innovation which is more popular with men.
“Science and technology doesn’t traditionally attract that many women, which is probably why there aren’t particularly many women in that type of start-up,” Julian says. “But social innovation, marketing innovation, customer experience, branding, aged care, teaching, in those sorts of areas, you do have lots of entrepreneurs, and lots of them are women, but there aren’t the programs around to support that type of entrepreneurship to the same extent there are in technology.”
Another reason is simply the fear of stepping in front of a room full of men, and pitching an idea. But the reality is the few women who do pitch at Sydney Angels have a high success rate, Widner says.
When Rawlings fronted investors seeking money for Street Hawk, she didn’t feel the men treated her any differently. Quite the opposite, in fact. “Women are often harder to pitch to than men,” Rawlings says. “They ask the harder questions.”