“Funding the Balance”: Shining a light on gender-based funding data

Imagine you're in a race, but not everyone starts from the same line. Some runners are way behind, not because they're slower, but because they weren't given the same starting point. 

This is what's happening in the world of startups, where the race for funding isn't equitable, especially for women, people with diverse backgrounds and intersectional identities (those with overlapping characteristics such as race, class, gender, age and more).

The latest "State of Aussie Startup Funding Report 2023", from Cut Through Ventures and Folklore Ventures tells us that teams with only men got 70% of the funding that was available in 2023, compared to teams with only women getting 4%. But believe it or not, this is progress, with it increasing 2% from 2022. 

The progress for women is moving at a snail's pace when we need to be sprinting.

The value of ecosystem reports in providing snapshots of progress cannot be understated and they act as a scorecard for our progress. However, the most critical narrative is not getting the spotlight it requires: the ongoing state of funding for women. 

With half of the population receiving only a small share of funding and overlooking individuals who fall outside traditional gender norms, our ecosystem is starkly failing in its mission to be inclusive. Considering that this very ecosystem is instrumental in shaping the economic future and the trajectory of innovation, our shortcomings are not just disappointing; they are a profound failure.

In the same vein as The Workplace Gender and Equality Agency disclosing the gender pay gap to ensure accountability in the corporate sector, we at NiceTo, Techstars Tech Central Sydney, and Overnight Success are launching an initiative called "Funding the Balance." Think of it as our way of making sure everyone gets a fair chance in the race.

Adding to the commentary Overnight Success already publishes about teams that got funded each week, we’ll now be providing you a digestible weekly breakdown on startup funding split by gender. It's not just about keeping score; it's about cheering on the wins and bringing the data into plain sight so we can empower you with the information to have informed conversations about the state of startup funding - and to ask tough questions when things don't add up. 

In future, we will also be providing cumulative monthly and annual snapshots of the data, so we can monitor progress together.

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Our methodology

We will look at publicly announced funding rounds and validate the data through LinkedIn profiles and surveys where possible. This means there will be a time lag from the time of raise to the data being published in our report. We will be breaking down the data:

• Funding & number of deals received by men only teams
• Funding & number of deals received by mixed gender teams
• Funding & number of deals received by women/non-binary only

Note - We are grouping women and non-binary individuals as we do not anticipate enough data to sufficiently report on women and non-binary founders separately. We recognise that this is not ideal and where there is sufficient data we will look to report in more granularity. 

A mixed team is a group with people of different genders and in the current definition has at least one woman. For example, a team can have mostly men or mostly women, and this difference may affect how much money they get. In the monthly leaderboard we will break this down to the individual level within teams to better understand the granular flows of funding raised. 60% mixed teams funded is great, but 60% mixed teams with 50% or more women/non-binary people is progress!

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Progress before perfection

We know that the process of capturing and reporting on this data, despite even our best efforts, will be imperfect. However, we’ve decided to go ahead with the belief that progress towards greater transparency, leading to more conversations around funding equality, is better than sticking with the status quo. To move forward, something has to change.

By only capturing funding activity that has been publicly announced, we recognise that our data may only reflect a subset of total funding activity, as some founders take the decision to keep their raises private for a variety of very valid reasons. While in the future, we would like to overcome this challenge of incomplete data, we don’t believe this should prevent the conversation from happening in the meantime, so we have decided to work with the information currently available to us.

If you’re a female or non-binary founder who would like support in announcing your raise or if you would like for your raise to remain private, but be included in the stats, please reach out to us, we would love to help. 

We'll use LinkedIn to validate gender where possible. However, if we aren’t able to find the information we require, we'll directly contact the founders for confirmation. Should there be any errors, please let us know and we'll update the records. If there are academics or anyone with ideas to improve the data or data collection method, please get in touch. We want to ensure we do our best to get the data right. 

In the future, we also hope to get data that covers more identities and looks at diversity more broadly. This is a complicated task, so please bear with us while we work on this in the background.

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Looking forward

Think of "Funding the Balance" as the beginning of a new chapter, where we all work together to make sure the future of business is as bright and diverse as the world around us. It's about giving everyone a fair start in the race and celebrating every step forward, no matter how small. We want to celebrate the people who get funded, but more importantly, we want to make sure as an ecosystem we hold ourselves accountable.

Preethi Mohan (NiceTo), Kirstin Hunter (Techstars Tech Central Sydney), Gemma Clancy & Will Richards (Overnight Success)

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