That there is a huge gender gap in venture capital (VC) financing is hardly news; even ChatGPT knows it.

This is despite the progress women have made in business in general.

According to a 2021 report from PitchBook, companies founded exclusively by women in the US and Europe received only 2.4% of total venture capital funding. Australian investors, while they fared slightly better at 5.4%are still far less committed to female-led startups than warranted.

So the problem is real. But instead of encouraging local female founders to just give up and go abroad to gather the capital what they need, I endorse playing the long term, championing a grassroots forward-looking model of gender equality, and lobbying government, business, and education to do better.

Provide mentorship, networking and sponsorship

Because female founders face deep-rooted challenges that male founders do not, such as the unequal division of caregiving and household duties, it can be incredibly helpful to have access to experienced female mentors who can share their experiences, guidance, support, contacts and opportunities can offer.

Some VC groups and incubators occasionally host events and conferences that bring together female founders and other professionals in their industry.

But there is a need for more consistent (and permanent) platforms for female founders to showcase their ideas and meet potential investors, increasing exposure and exposure to decision makers and funding opportunities.

Lobbying the government to change policy works. The US model of investing up to 10% of pension fund money in venture capital since 1979 has funded Google, Apple and Amazon, brought innovation to market, created a world-leading ecosystem and benefited the entire economy.

Similarly, changing government policies in Australia would be one way to encourage investment in more female-focused investments incubators, which would in turn attract industry-led mentoring and sponsorship. It is well documented that every government dollar spent on supporting start-ups attracts many more dollars in private investment.

VC Funds for Female Founders

Let’s make more funding and resources available, specifically for women-led start-ups, to tackle funding inequality. VC firms such as Scale enterprises and that of Airtree Female Foundation fund invest in early-stage start-ups founded by women, money that comes with other benefits like mentorship and resources.

crowdfunding platform microwave organizes campaigns specifically for companies founded by women, while Heads Over Heels connects female founders with potential clients and investors.

These are great initiatives that are already starting to make a difference in the prospects of some of the women-led companies. But we need more to make a difference. One way to achieve this would be to require pension funds to invest a percentage of their venture investments in dedicated funds focused on female protagonists/women. This would fit fit well into their own ESG policies, but I bet it would also improve their return on investment.

Put women in VC decision-making roles

Unconscious bias is an ongoing challenge that has yet to be overcome. Investors often fund start-ups run by people who look like them or have a similar cultural or ethnic background. Coincidentally, the vast majority of venture capital decision makers are still men.

Unfortunately, since they probably aren’t aware of their biases, it’s hard to change them.

Education and training may have something to do with this, but the real solution is to employ more women at all levels of investment decision-making.

There’s no reason why venture partners, investment analysts, and investment managers shouldn’t be women, except bias. The talent is definitely there. This is perhaps the most powerful tool for leveling the playing field for female founders in the long run.

Close the pay gap between men and women

The national pay gap between men and women, which is still at 13.3%, is another issue affecting female founders. If you earn less, you are less likely to save and start your business. This is exacerbated by primary care responsibilities, which continue to largely affect women.

The Workplace Gender Equality Agency recommends paid parental leave, flexible working arrangements, inclusive recruitment practices and redesigning part-time management positions as some of the solutions to bridge the gender pay gap.

But more transparency, more reporting and oversight is needed, leading companies to go beyond ticking the ESG box.

Stride Equity, a female-led VC group, will fund companies that are truly investable, with founders who will benefit from advice, mentoring and upskilling when needed. I see start-ups and my experience is that far more than 5% of these companies are founded by women. We aim for funding ratios that reflect this.