VCs commit to data disclosure on female-led startup investment and screening

The 13 funds involved - including Blackbird and Airtree - have committed to releasing data on the number of women-led businesses and mixed teams they’ve screened, conducted due diligence on and invested in each year, all in the interests of improving equality and transparency. 

The program was initiated by Alberts investment manager Lisa Fedorenko, Scale Investors co-CEO Samar McHeileh, and Giant Leap partner Rachel Yang, whose companies are all involved.

Other participants include LaunchVic’s Alice Anderson Fund, the Artesian Female Leaders VC Fund, Euphemia, Trawalla Female-Led Ventures, Tractor, Friday Club, Climate Salad, and Birchal. Another 40 have expressed interest in taking part.

"Transparency is a known tool for equality and we can't improve what we can't measure. A united industry with clear gender reporting is a great step forward for equality in venture capital in Australia," says Lisa Fedorenko of Alberts.

"Over half of Albert Impact Ventures portfolio companies have at least one female founder, we're proud to be reimagining and supporting a more equitable playing field. 

"More diverse founders mean more diversity of thought, more diverse problems being solved and are correlated with higher commercial returns."

The new program follows the latest Cut Through Venture Report, which in the June quarter found that for a startup with at least one female founder the median deal size was $1.9 million, compared to $3.1 million for all-male founding teams.

This represents a 63 per cent funding gap for women founders, which is significant but is a slight improvement on the 65 per cent gap in 2022, and a large jump from differences of 80 per cent and 130 per cent in 2021 and 2020 respectively.

The overall decline in funding meant Series A deals for women-led companies hit a five year low this year, while the share of funding for women-led startups has skewed towards angel, pre-seed and seed rounds.

Samar McHeileh of Scale Investors says while this is starting in the venture funding space, the goal is to have these metrics reported across the startup ecosystem - particularly for early stage accelerators, funding programs and the teams running them.

"We need to see change happen across the entire pipeline to ensure that women-led companies gain access to funding from larger VCs," she says. 

"It takes time to both ensure you have consistent data on this that is meaningful or to set up processes that allow you to capture this information going forward. While some funds are ahead of the curve here, others will need more time. 

"This applies for us at Scale Investors too. We've been around for 10 years, and it's safe to say we haven't been capturing pipeline data accurately from the beginning. It is simply a matter of making slight adjustments to the collation of data, and we will all get there pretty quickly. 

Rachel Yang of Giant Leap says her firm's philosophy is that diversity breeds both stronger companies and also greater returns. While the pure-impact VC firm considers all pitches it receives equally, the data reveals that companies with at least one woman founder who pitch the fund are almost three times more likely to have their pitch escalated and reviewed by the fund’s investment committee.

"We are not ruling out companies for lack of diversity. But I think our data points to the fact that the pitches we receive from diverse companies are more sophisticated, focused on impact, and successfully embody this idea of growing revenue alongside social and environmental benefits," she says.

"Going forward we aim to enhance this process to collect data on women-only teams, non-binary founders and other forms of diversity too."