Lack of capital still handicaps women-led small businesses

Lack of capital still handicaps women-led small businesses

A lack of access to funding continues to constrain women-led small businesses, according to research conducted by the Australian Small Business and Family Enterprise Ombudsman’s (ASBFEO) office.

In an ASBFEO survey of more than 600 Australian women-owned, women-led small businesses, 43 per cent of respondents identified access to funds as a central barrier to growth.

Ombudsman Bruce Billson says it’s disappointing that on International Women’s Day 2022, female entrepreneurs are still facing headwinds when trying to grow their businesses.

“On International Women’s Day, it’s important to recognise the obvious economic benefits that would flow from addressing barriers to growth for the rapidly increasing number of Australian women small business owners,” Billson says.

“Two-thirds of new businesses created in Australia in the past decade have been founded by women (Xero Boss Insights 2021) and there has been a 46 per cent jump in women business owners over the past 20 years (ABS).

“The recent State of Australian Startup Funding report found 82 per cent of female founders believe gender impacted their ability to raise venture capital funding. Just 10 per cent of female founders felt highly confident they would raise their next funding round, compared to 63 per cent of male founders."

The State of Australian Startup Funding 2021 report also found 59 per cent of female founders felt somewhat confident they would raise their next funding round, with 67 per cent feeling at least somewhat supported by Australia’s startup ecosystem.

However, the percentage of equity funding events involving startups with at least one female founder only increased by one percentage point to 19 per cent in 2021. The share of total capital invested in startups with at least one female founder slipped considerably, falling from 28 per cent in 2020 to 22 per cent in 2021.

Artificial intelligence (AI) and big data was the sector with the highest percentage of teams with at least one female founder at 50 per cent, followed by biotech at more than 40 per cent and blockchain hovering just above 30 per cent.

The State of Australian Startup Funding 2021

The State of Australian Startup Funding 2021

 

Five of the 10 largest deals in 2021 involved the mixed-gender founding teams at Judo Capital (ASX: JDO), Airwallex, Canva and Octopus Deploy. However, only two per cent of total capital raised went to female-only founder teams.

“The pathway for Australia to create a more inclusive funding environment is clear: hire women onto investment teams and promote them to leadership, deploy capital to female founders and invest in technology, products and services that empower women to live, learn, and work as they choose,” Folklore Ventures head of communications Stefanie Safahi said.

Women are also facing financial inequality on a global scale, with The World Economic Forum estimating it would take 257 years to reach economic parity between women and men globally. 

According to Asialink's Empowering Women Innovation Leaders in Australia and Southeast Asia: A regional blueprint report, the gap “is expected to increase” as COVID-19 worsened “pre-existing inequalities that have historically seen women face greater economic and employment uncertainty and take on a greater share of the unpaid care burden.”

The organisation - founded in 1990 with the support of the University of Melbourne and The Myer Foundation - also found female-owned businesses are 5.9 per cent more likely to close during COVID-19 compared to male-owned businesses worldwide.

“Globally, the World Bank reports access to finance is a ‘major hurdle’ as women are left with an estimated $1.7 trillion of unmet demand for credit,” Billson said.

“By reducing headwinds and energising female enterprise there is a significant economic upside. Research by Asialink suggests boosting the number of female business owners to equal that of men, could add between $70 billion and $135 billion to our economy.”

“Women’s economic empowerment is key to our national recovery after an incredibly challenging couple of years. My office will continue its work in identifying opportunities to improve the environment for small business and women’s entrepreneurship.”

Asialink's report states "women in Australia do not have the same access to business networks as men" and calls on sectors such as "government, business and civil society" to introduce "greater regional opportunities for networking".

“We know there is a gendered impact of disasters. We know issues related to gender equality and women’s rights are sidelined during times of crisis — during relief and recovery. That doesn’t only have an immediate effect, it has a generational and long-lasting effect,” women’s empowerment and gender equality, The Asia Foundation senior director Jane Sloane said.

“I am concerned about women’s political participation and voices during the time of COVID-19. Women’s leadership and contribution to decision-making saves lives. It’s not an add on.”

“Women’s access to economic opportunities and security contribute to the wellbeing of their families, their communities and countries. Economic empowerment of women stabilises the family and, in turn, the economy and society as a whole.”

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Crypto staking: a new way to earn passive income
Partner Content
You may be familiar with traditional ways of earning passive income such as trading sto...
Etoro
Advertisement

Related Stories

Shares in edtech OpenLearning rise on appointment of M&A advisor IBIS Capital

Shares in edtech OpenLearning rise on appointment of M&A advisor IBIS Capital

Shares in education software as a service (SaaS) business OpenLearn...

AI voice tech Curious Thing closes $7 million pre-series A funding round

AI voice tech Curious Thing closes $7 million pre-series A funding round

Sydney-based artificial intelligence (AI) voice-tech platform ...

Underwear brand Step One dacked after downgrading sales growth and earnings forecasts

Underwear brand Step One dacked after downgrading sales growth and earnings forecasts

Shares in Australian underwear brand Step One (ASX: STP) have crash...

Brambles confirms takeover talks with CVC Capital Partners

Brambles confirms takeover talks with CVC Capital Partners

In a short statement posted to the ASX this morning, Australian log...