A comprehensive report by LaunchVic shows shows signs of maturation and rapid growth in Victoria's startup community, including a massive swing in the past four years towards entrepreneurs who are first-time founders or trying something completely new, but the figures for gender representation remain far short of equity.
Released the day after International Women's Day (IWD), LaunchVic's Victorian Startup Ecosystem Mapping 2022 report reveals some encouraging signs for female founders as far as progress is concerned, but in absolute terms women remain far behind men due to the structural, socioeconomic and cultural disadvantages present in our society.
Firms with at least one woman founder grew from 20 per cent to 34 per cent in 2022, although women only represent 22 per cent of founders across the 2,118 companies analysed in the report.
This representation is also much more skewed towards early stage companies at 40 per cent, versus just 18 per cent of growth stage companies having a female founder on board.
The report's researchers also found that companies with a female founder had significantly smaller median capital raises at $1.8 million, versus $5.8 million for firms without female founders.
In the timeframe analysed, 33 per cent of firms with a female founder raised more than $5 million, versus 52 per cent for firms without a female founder. LaunchVic clarified that less than 1 per cent of all firms had gender non-confirming founders.
"There has been huge growth in women-led founders representing a third of total firms, however women founders continue to raise less capital," Launchvic's CEO Dr Kate Cornick and chair Leigh Jasper wrote in the report.
In May last year, a study from Kaisa Snellman and Isabelle Solal published in Organizational Science explored the more nuanced consequences of a highly male-dominated venture capital environment globally. Whilst studies show female investors are more likely to back female founders, their research found that female founders who were backed by female investors were two times less likely to raise additional financing in later rounds.
"In an experimental study, we find that pitches by female-backed female entrepreneurs receive lower evaluations compared with all other pitches, and that this is driven by perceptions of entrepreneur competence," Snellman and Solal wrote.
"Our findings suggest that well-intentioned calls for women to invest in women not only place an undue burden on female investors, but may also undermine the long-term success of female entrepreneurs."
In other findings around gender, LaunchVic reports Safety & Public Service is the only sector with a majority of women founders at 67 per cent, while other sectors with relatively high rates of female foundership include Education and Health with over a third. Commerce and energy are the most underrepresented sectors for female founders.
A minority of companies have diversity and inclusion policies, while the report claims none of the responding firms had founders who are of Aboriginal or Torres Strait Islander descent. The report found 36 per cent of firms have founders from racial minority backgrounds, while 10 per cent identify as LGBTQIA+.
Overall, the report reveals some enlightening statistics on the composition of startups and scaleups in the state, where the average age of founders has remained steady at 42 but the share of founders in their 30s has risen substantially. The majority of founders are now first-timers at 53 per cent, up from 44 per cent since 2020's report, while innovation is strong as well.
"In 2022 founders are a lot more innovative than they were in 2018 (58 per cent compared to 24 per cent) aiming to create a new market rather than replicate business models proven elsewhere, which is a higher risk but higher reward strategy," Dr Cornick and Jasper wrote.
"This is vindication that LaunchVic's strategy to increase the number of innovative startups is working."
The share of companies with more than 10 employees grew from 21 per cent to 32 per cent from 2018 to 2022, while the startup creation rate - measuring the number of startups formed in 2021-22 divided by the number formed in 2018 - was 93 per cent for the hub of Melbourne, which itself represents 93 per cent of startups in the state.
This means Melbourne's startup creation rate is outpacing other global hubs like Tel Aviv, Toronto and Amsterdam. It's also one percentage point higher than Sydney, but short of Brisbane's 104 per cent rate. The fastest-growing global hubs noted in the report are Singapore and Seattle (each 140 per cent), followed by Berlin (120 per cent).
"For 2022 the report confirms what we anecdotally know. The Victorian startup sector is maturing at a rapid rate," Dr Cornick and Jasper wrote.
High-growth firms highlighted in the report include Vivi, Culture Amp, Delegate Connect and FrankieOne, as well as unicorns such as Zeller, Airwallex, Linktree and Telix Pharmaceuticals (ASX: TLX).
The report was developed using LaunchVic’s startup database powered by global data providers dealroom.co and Startup Genome.
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