IT's a man's world
Entrepreneurship, many claim, is the platform of the new women's movement and Australian women technology entrepreneurs and their advocate groups have started the new year poised for action.
Springboard Enterprises Australia, a female-focused venture catalyst launches its first Accelerator program this week in Sydney with the group's US founder Kay Koplovitz; NICTA is kicking off its Techfest event in Canberra with a breakfast panel discussion on women; and in Adelaide, the ANZ Innovyz START Program, a three-month intensive start-up accelerator program started by Dr Jana Matthews has already begun its second year program.
Springboard Enterprises and the Innovyz START programs are modelled on successful US initiatives. Springboard has raised $US5.6 billion for about 500 companies since 2000, with 10 IPOs. The ANZ Innovyze program is modelled on TechStars, which has fostered some of the world's most successful start-ups. Dr Matthews' program selects ventures started by both men and women, but she is a strong advocate for female-led start-ups and goes out of her way to find them.
These initiatives are as sorely needed in Australia as elsewhere. But they have myriad cultural hurdles to jump and economic minefields to navigate. Throughout 50 years of successive waves of tech innovation and the VC-driven entrepreneurship it has fostered, women are still woefully under-represented in the ranks of founders, financiers, coders and engineers.
The stats are cringe-worthy: Women own anywhere between 30 per cent and 50 per cent of small businesses. But when it comes to creating high-tech startups, they're still in the single digits. Less than 10 per cent of venture-backed companies in the US have female founders, even co-founders. Women make up a third of the tech workforce but represent less than 7 per cent of VC partners and less than 15 per cent of angel investors. The statistics are worse in Australia, where tech venture generally is still unsophisticated in comparison with other hubs in the US, Germany, Israel and India.
These inequities are acknowledged and talked about in international tech industry and policy arenas, but there has been little concerted action to address them. Why? For starters, they haven't needed to.
The tech revolution was created by engineers and computer scientists who built products largely for IT departments of large corporations also staffed by men. The “money” side of tech – venture capital – was also populated with men who were successful in former iterations of the tech revolution. Hence, blokes built products for blokes to sell to blokes who bought them: a closed loop of the boys club.
Many of the woman-focused groups are betting on the changing nature of the technology landscape: the maturing of the internet and the shift to consumer-focused applications and businesses. It is in this and next generations of consumer tech that women claim their skills, business savvy will rise. The trend has started with fashion, photo-sharing and social media-based startups, but the hope is it won't end there.
There is opportunity in this structural shift. But in the intensely competitive world of tech start-ups, where an estimated three quarters of venture backed companies did not return investors' capital (according to a recent Harvard Business School Study of 2000 start-ups that received an average of $US1 million in funding from 2004 to 2010) female entrepreneurs have other stylistic and cultural issues to overcome.
Research shows women are less “investment ready” than men, are more risk-averse and less likely to go for the “big ask” for capital.
Importantly too, they lack the robust business and mentoring networks long exploited by men.
Female entrepreneurs also have the challenges of still being the primary carers of children, which makes them more time constrained than men when starting businesses with global scale.
And the tech boys' club is even tighter in Australia, dominated by mostly white males that come from large multinational corporations and consultancies. The investor pool for tech in Australia is also as unsophisticated as it is undiversified.
In the US for example, there are many tech-savvy men and women who have made money from tech and so become angel investors. They have what's called tech “domain expertise”.
In Australia we have many well-intentioned angel guilds. But the significant majority of angel money comes from men who made their money everywhere but on tech. So it is a constant struggle for tech entrepreneurs of either gender to get funded.
Success trumps bias, venture capitalists say, and incremental success builds exponentially, so the theory goes. But it will be a long haul. To really help themselves and their own ventures, women must build strong integrated and diversified domestic and international networks and mentor systems and pursue a pragmatic and focused agenda that helps the whole tech start-up ecosystem here.
The key to that agenda must be eliminating the complex treatment of stock options for tech start-ups. This is the single biggest impediment to starting a tech company in Australia. It's an election year. Lobby for changes to those punitive taxation rules and then we may all have a better chance of success.
Sandy Plunkett has more than 20 years experience in the Australian and international technology sector as a commentator, venture capitalist, start-up professional and digital economy consultant. She recently returned from 15 years in the US, from working at venture capital firm, Allen & Buckeridge and a Sillicon Valley start-up.
More on employee stock option plans (ESOP)