As one of the first backers of design platform Canva, Jenny Newmarch Senior Portfolio Manager – Private Equity at Aware Super has a message for female entrepreneurs when it comes to getting funding.
“Is anyone else trying to solve the problem you are in business, and importantly, does anyone else have the solution you have?”
Newmarch says these are two of the big X factors that venture capitalists and institutional investors are looking for when they analyse companies for investment.
“We are strong backers of female-led companies in our portfolio and we find that female founders tend to tackle some really important problems and are particularly strong at identifying problems and solutions faced by women, where male founders aren’t particularly focused.
But looking at the problem and solution isn’t the only thing that Newmarch is interested in when investing in female-start ups, she also looks at the personal qualities of the founders.
“We are not trend led but very much founder led,” she says. “We can see interesting opportunities in a businesses by the passion that founders can bring.
“We also have a dedicated lens on identified investments that not only deliver great returns, but also deliver on a purpose – and these two are very strongly aligned and that’s absolutely critical in terms of what we are looking for in new investments and businesses.
For example, Canva, which we first invested when it was worth $US 100million and its now worth around $US40 billion, is about democratizing design and as we know they have hugely successful in doing this.
“While its difficult to predict the next Canva, we have a lot of potential strong business in our portfolio and given where the government is likely to go in terms of net zero, were feeling very excited about Climate Friendly and other prospects in this space seeing as they are playing into that net zero trend.
“While women do find it harder to raise capital than their male counterparts, the secret to success for female entrepreneurs is that those who are able to raise funds typically have significantly better and more proven ideas than the average male, and because of that they are more likely to go on to be successful and that’s been proven in the statistics.
Research by Boston Consulting Group found that startups founded and cofounded by women actually performed better over time, generating 10% higher cumulative revenue over a five-year period: $US730,000 for women compared with $US662,000 for men.
So what’s trending in female-led start ups?
Tech platforms are very much in vogue, particularly those that are trying to break new ground in health care and space technologies.
Newmarch is a big fan of Fleet Space Technologies, led South Australian rocket engineer Flavia Tata Nardini and consumer-led health care company, Kin – which provides fertility support to women and is led by Nicole Liu.
Tips for female founders
Globally only 2% of venture capital funding goes to female founders and some of that is due to sheer gender bias and some believe that women are more likely to downplay the opportunities in the pitch process.
“One thing that I have seen an observed is that venture capitalists can have a different lens when judging men and women in business.
“Men are more likely to pitch the opportunity and the upside, whereas women are less likely to do so and will focus more on mitigating the risks in their pitch.
Newmarch recommends the following to female founders:
1. Build your networks in the start-up incubation space. For example join communities like Blackbird, which is where early stage founders can come together and build a network of potential funding sources.
2. Be optimistic and talk up the opportunities
3. Show your passion about solving a problem with a unique solution and;
4. Be relentless. I don’t think there are many overnight success stories. Many founders experience hundreds of rejections before they get the first acceptance with funding.
5. Make the most of timing. There has never been a better time for women to start and succeed in business. So whether you are sitting on a big idea, or have been plugging away at it for eons, time is on your side if you want to push yourself forward.
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