Giant Leap report reveals small steps for women at impact startups

Giant Leap report reveals small steps for women at impact startups

Much has been said about the lack of female founders in the Australian startup landscape, but a new report from investor Giant Leap has found that gender diversity is slightly more pronounced in businesses looking to make a real impact on the planet.

More than one in four (26 per cent) of the approximately 1,000 ‘impact startups’ reviewed by Giant Leap in its Impact Startup Benchmark Report, 2023 were women-led, marginally above the average of 23 per cent seen across the broader ecosystem.

According to Giant Leap, an ‘impact startup’ is a high-growth, technology-enabled, early-stage business that has impact embedded in its business model, whether that be taking action to address the climate crisis, improving our physical and mental wellbeing, or improving the livelihoods of our most vulnerable populations.

Though women might be making big strides in the impact startup space, funding for women-led businesses remains low. In Australia, just 0.7 per cent of funding secured by startups goes to solely women-founded businesses, and only 0.03 per cent to women of colour according to the Benchmark Report.

As for the breakdown of what sub-categories of ‘impact’ these startups were working in, Giant Leap found the majority (51 per cent) were focused on addressing climate change, 29 per cent were working in the health and wellbeing space, and 12 per cent fell into the category of empowering people through education and care.

“This report drives home a trend we’ve been seeing in the market for a while now: Australia is an incredible place to be an impact founder and investor,” Giant Leap managing partner Will Richardson said.

“We’re seeing more and more incredible, inspiring people mobilising and coming together to unlock businesses’ immense potential to reimagine industries to create a better future and investors are realising that these businesses present an enormous opportunity.”

With the topic of funding for women-led businesses front and centre, the impact investor noted that 55 per cent of the companies it had backed were women-led - ‘significantly greater than the norm within the broader ecosystem’ according to Giant Leap.

The report detailed that if women and men participated equally as entrepreneurs, global GDP could rise by approximately 3 per cent to 6 per cent, boosting the global economy by $2.5 trillion.

“We also believe in the strength of women-led businesses, which generate 12 per cent higher revenues annually, using an average of a third less capital than their male counterparts,” Giant Leap said.

Giant Leap’s report also noted that the number of female VC investors in Australia remained low, and pointed to a 2020 report from the Australian Investment Council which found that women make up only 15 per cent of VC leaders, while only 25 per cent of all VC investors were women.

This element has been amplified by a lack of access to networks and resources for women looking to enter the VC industry according to Giant Leap.

“Research has shown that men are more likely to have access to the networks and resources needed to become successful VC investors,” Giant Leap said in the report.

“This lack of access can make it difficult for women to gain the experience and connections necessary to become successful VC investors, which in turn perpetuates the lack of representation in the industry.”

Giant Leap partner Rachel Yang said backing women-led businesses was a ‘no brainer’.

“To be clear, supporting women-led startups is not charity, it’s just good business,” Yang said.

“Women founders achieve more with less capital investment and their wider participation in the entrepreneurship space is a $5 trillion global opportunity.

“It’s a no brainer why we need to keep pushing on this.”

Giant Leap’s Richardson added there were still myriad challenges for the ecosystem to address.

“More work needs to be done to encourage and support founders from underrepresented backgrounds with diverse lived experiences. Given our current data, we believe that further work here will also lead to the creation of more impact startups,” Richardson said.

“Also, despite the headwinds facing the startup ecosystem this year, we’re confident that impact startups will not only continue to grow, but will emerge from this period stronger than ever before. Many are addressing fundamental issues in society and the environment that will exist well beyond this downturn.”

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