Technology startups arise from innovative ideas, often initiated by college graduates or when a problem needs solving in a business. Unfortunately, when it comes to fundraising, there appears to be a significant bias against women tech founders.
In 2022, the author attended a pitch presentation for an AI chatbot solution, ChatGPT. The startup aimed to raise $20 million, but fell short raising $12 million. The experience made her realize the challenges she faced in securing funding despite having a positive revenue, secured clients, sales channel and a disruptive product offering.
This motivated her to approach ‘Female Funds’, through which she experienced that they often prefer investing in industries they understand like retail, health-related startups, and those with multiple partners. These challenges stifled her enthusiasm for capital raising.
She describes a bias in venture capital firms and their boardrooms against women tech founders. Despite the increasing visibility of women in tech, women founders often struggle to gain the credibility and respect afforded to their male counterparts. Men often raise substantial VC funding based on an idea, without having to present comprehensive metrics and projections demanded from women-led ventures.
This bias extends to investors doubting a founder’s ability to lead and grow a tech company unless they have direct sales experience, thereby disproportionately affecting women. Government efforts have been made to address this disparity, but the issue persists.
The State of Australian Startup Funding report highlighted the gravity of the issue. Of the $3.5 billion of funding in 2023, only 4 percent went to women-founded businesses. Even those few deals often had a male co-founder. The scenario is further aggravated by the fact that median deal size for all-male-founded businesses was $3 million compared to $700,000 for all female-founded businesses.
To bridge this gap, she calls for increased support and advocacy for women tech founders by women in influential positions. Steps like mentorship programs, funding initiatives, and policy changes are vital to level the playing field. The tech industry needs to foster a culture that values diversity and inclusivity, recognising the contributions of women in technology and that innovation thrives in diverse environments.
On International Women’s Day, it’s crucial to hold each other to a higher consciousness about women in technology and work together in bridging this gap.
