Female founders in general find it more difficult to secure investment, despite proof of their relative commercial success when compared with male counterparts. There are considerable systemic challenges which need to be addressed, and the solutions will need to be multifaceted.
Without being reductive about those systemic challenges, one thing that can help a female founder to get noticed is effective PR.
The stats
First of all, arm yourself with the facts, and use them to sell yourself!
- Women-led teams generate a 35% higher return on investment than male-led.
- They create 10% more cumulative revenue over a 5-year period.
“For all-female founding teams, globally, funding is between two and four per cent (of all funding),” said Roo Harris, General Partner with Scale Investors, an emerging funds manager focused on seed stage women-led startups.
“This figure increases if there are both men and women on the founding team, but still remains disappointingly low.”
And by implication, the lion’s share goes to all-male founding teams.
The ‘Moneyball’ effect
Despite the low levels of investment in female-founded companies, a little-known fact is that they outperform other companies significantly.
“Investing in female founder businesses, on average, you’re going to do better,” said Melbourne-based investor Phil Dolan, who has been investing in impact startups for more than a decade.
“Unfortunately, though, I think female founders can struggle to get taken seriously. And that, to me, opens a gap in the market. It’s a little bit like the book Moneyball by Michael Lewis.”
For the uninitiated, Moneyball is a book (and film) that shows how a struggling baseball team relied on statistics, rather than biased ‘gut feelings’ or ‘hunches’, when recruiting baseball players. For example, sometimes a player with an unusual body type or clumsy running style would be overlooked by major teams despite their superior batting averages. Based on investment facts, Dolan has made multiple, successful investments in female-led businesses that other investors might have overlooked because they were relying on their (biased) gut feelings.
How is it so?
In short, people like to hire, or invest in, people who are like themselves. And the majority of investment decision makers are male. While there are other factors, this unconscious (or conscious) gender bias is right up there.
The good-ish news
With female founders being akin to a Moneyball-esque hidden treasure, people have started to wake up.
Some reasons for optimism:
- In our own work with media relations at Bespoken, we often see journalists seeking female interviewees to ensure balance. Good journalists have long understood the need to seek a mix of female and male voices. With recent attention on the issue of discrimination against female founders, we are seeing journalists seeking these voices in particular.
- There is an increasing number of grants, awards and accelerators for female founders. While not all of these are created equal, many offer significant opportunities for networking, pitching to investors and public relations (PR). Of course, these kinds of programs also exist in contexts that aren’t gendered, and women should absolutely not limit themselves to overtly female-focused programs. You can Google to find appropriate opportunities. Also follow state and federal innovation arms of government on LinkedIn for useful announcements.
- Many event organisers seek out females for panels and speaking spots. These days, it is seen as tone-deaf if an event program is full of headshots of white males.
All of the points in the list above are nice to have. But let’s face it: until money starts flowing to female founders, the problem hasn’t been addressed.
So perhaps the most positive news is that a growing number of venture capital (VC) funds and investors are either targeting female-led startups, or measuring and reporting on diversity across their investments in a consistent way.
Equity Clear is a new, voluntary system for reporting on diversity metrics. In Harris’ experience, there are signs it’s starting to have the desired effect. VCs who have signed up to Equity Clear are now required to be transparent, and in plenty of cases they have had to admit they are falling short. But this is the start, and a very promising one at that.
PR and communication tips
- Build your personal brand
There are many ways to build your personal brand that will bode well with potential investors and strategic partners. Use your personal LinkedIn to connect and share insights in your key areas of expertise. Seek media coverage of your business milestones. Network at industry events and get to know the people in your ecosystem. Approach event organisers about speaking opportunities. Apply for awards. Your hustle will not go unnoticed.
- Meet with impact investors
If your business is focused on a solution that will make the world a better place, you’ll be in a position to approach ‘impact investors’. This is a space where gender bias is less common, in the experience of Oho founder Claire Rogers. (Ms Rogers has seen Oho’s child protection software through two successful funding rounds).
“[Impact investing] is a growing VC market, if you look at it globally. And there, gender was not such an issue [when seeking capital for Oho]. It’s always helpful when they genuinely have a mission and a purpose and they are looking for businesses that solve societal problems, because they want to have impact,” she said.
Of course, impact investors aren’t going to be the right fit for everyone. Ms Rogers recommends if you are going to pitch to a commercial fund, make sure you “over-index” on your metrics and finances. Know your businesses’ figures inside and out so you can bust any stereotypes about women not being as strong when it comes to numbers(!)
- Reframe the question
A study from Columbia University showed VCs tended to ask male founders questions about their vision, whereas women were asked more about regulatory and risk issues.
“If you reframe the question that the investor asks you, you can substantially increase the amount you’re able to raise,” Harris said.
“So, you take the risk and regulatory question and you say, ‘That’s a really interesting question. Let me first talk you through where we are going.’”
Diversity
In closing, it needs to be acknowledged that bias isn’t just something that affects women. Investors can consciously or unconsciously make decisions based on someone’s ethnicity, disability and other diverse backgrounds.
“Globally we are seeing growing awareness of all types of diversity issues in the investment space. Australia is lagging, however,” Harris said.
The 2024 Unicorn Founder DNA Report by Defiance Capital studied 845 “unicorns” and 2,018 “unicorn founders” in the UK and USA to see which factors might have helped these companies to significantly outperform others.
A remarkable 70% of unicorns had “underdog founders” (immigrants, women, people of colour). It is thought that the fact these people have “no Plan B” and “a chip on their shoulder” might be drivers of success.
“Overlooked and under-served founders from diverse backgrounds are an opportunity for out-performance (higher than average returns). And in terms of unlocking innovation there is so much potential in this neglected cohort,” Harris said.
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