Start-ups are vital to Australia’s business performance and economic prosperity. However, we’re not fully leveraging our women entrepreneurs, as shown in Deloitte’s new report for SBE Australia – Accelerating female founders: the untapped investment opportunity – that examines trends in women-founded businesses in Australia and the ecosystem in place to support them.
The Australian start-up ecosystem has changed dramatically over the past decade. In 2013, there were only four active accelerators in Australia. Less than 10 years later, there are around 40 in Sydney, and more than 50 in Melbourne, and the amount of funding available to Australian start-ups has risen strongly, with total private funding increasing tenfold from FY18 to FY22.
Over the decade, support for women founders has also grown. SBE, Heads over Heels and Scale Investors – the three programs analysed in this research – have supported at least 340 unique women-founded businesses. Our research finds that participants gain personally – in confidence and networks for example –and their businesses also grow, reach new markets, and receive more funding because of the supports. Surveyed program participants report significant improved confidence (94% of surveyed participants), improved business skills (78%) and greater access to mentors and networks (86%).
And yet, despite this growth in the broader ecosystem and uplift in support, only 22% of start‑ups are currently founded by women. Access to funding remains a key barrier for them, with the share of start-up funding going to female founders stubbornly low. Despite growing support and attention for women founders in Australia, they received just 0.7% of private sector funding in FY22.
Research suggests this disparity is not attributed to potential investment returns or business fundamentals, but rather embedded gender bias. The practice of pattern-matching— where investors match how similar a prospective opportunity is to past ones—needs to be overcome to increase investment for women-founded businesses.
Source: Startup Muster, Techboard female funding data (2022), CEW Census 2021, AIC Women in Private Capital Report.
What we’re seeing here aligns with gender gaps in the labour market more broadly, not just in entrepreneurship. The gender gap in entrepreneurship widens when moving from the number of founders to the value of funding. This pattern is mirrored in the poorer representation of women at increasing levels of seniority in large organisations and in investment decision-making. The fact this pattern exists, indicates that the issues occurring in entrepreneurship are not all unique to start-ups, and are reflective of broader gender inequity in the economy and society.
And importantly, our research finds that there is a huge economic opportunity from better leveraging women business founders. In FY21, the 341 active businesses supported by SBE, Heads Over Heels and Scale Investors alone facilitated $1 billion in economic activity to the Australian economy and supported nearly 4,900 full time equivalent (FTE) roles across the country.
This is a significant amount, and this value is set to grow as more women participate in these programs and networks, and existing women-founded businesses scale-up.
Improving women’s representation in entrepreneurship presents a significant economic opportunity to Australia – and now is the time to act on it.