“Completely useless”: Boosting Female Founders program continues to hold back startups

It’s been 18 months since applications opened for the third round of the Boosting Female Founders (BFF) grant program. During that time up to 700 applicants were sitting on matched funds — waiting to discover if they receive a slice of the $11.6 million reserved for this cohort. However according to recent correspondence, that wait may continue into 2024.

Launched by the Morrison government in 2020 and headed by the Department of Industry, Science and Resources (DISR), Boosting Female Founders offers startups that are majority-owned or led by women grants between $25,000 and $480,000 to assist in scaling up their business.

According to the program’s online portal, it aims to “help women entrepreneurs overcome the disadvantages faced in getting access to finance and support to grow their startups”.

One of the key aspects of the initiative is that it offers its successful startups matched funding. This means that all applicants must have access to already committed funds when applying for the grant.

This is why round three of BFF has become a serious issue — hundreds of women-led startups, which the government claims to want to help, had funds tied up while waiting for a decision to be made. For some of the applicants, this is to the tune of hundreds of thousands of dollars.

This number of startups now sitting on matched funding has now reportedly dropped after the second round of the application process opened in mid-2023. But some startups have still been left unhappy with the process.

“We found the whole program completely useless,” a source told SmartCompany under condition of anonymity.

“We had the matched funding. We were ready to go. We had planned for it to be organised in October last year – that was the deadline.”

“And then they put it off for six months and didn’t announce it. And by then we’d fallen below our expected runway and couldn’t match it anymore – certainly not at the $400-something [thousand] that we were going for.

“It made itself completely irrelevant to us within that six-month period.”

Now applicants will have to wait even longer.

In correspondence seen by SmartCompany, it was revealed that the decision-making deadline had been extended yet again.

“Unfortunately, there have been some delays which has held up the process and we envisage that final approval and contract negotiations will occur in December 2023 to early January 2024. If the process can be expedited, then we will be able to notify all applicants earlier,” one email read.

The department would not confirm an exact date directly with SmartCompany.

“Funding for Round 3 of the Boosting Female Founders (BFF) initiative was confirmed through the Government’s Spending Audit. All rounds of this initiative are delivered through a two-stage competitive selection process,” a spokesperson for the department said in an email to SmartCompany.

“Applications for stage two of Round 3 opened on 20 June 2023 and closed on 20 July 2023. The department is now undertaking the final stages of that selection process, with the outcomes expected to be announced by Government shortly.”

The significant delay of round three has also called into question the validity of the grant applicants

“A grant application done 18 months earlier, when you’re looking at a startup, is not worth the paper that it’s written on,” Michelle Fotheringham, founder and CEO of Werking, said in a call with SmartCompany.

Fotheringham was an applicant in round two of BFF but ultimately decided to go down the bootstrapping route.

“Where a startup is at month zero — or wherever it is that they are — plus 18 months later are two completely different stories.”

“Some of those businesses would have folded. Some of them would have accelerated and might not actually need the money anymore. Others might have completely changed direction. Plus the macro environment has changed so significantly over the past 18 months – the economy and interest rates.

“So to be able to assess an 18-month-old business application for anything sounds a little bit strange to me.”

SmartCompany asked the department about its process around this, but it did not go into specific details.

“The department undertakes due diligence on grant applicants, including throughout the assessment process,” as spokesperson said.

Boosting Female Founders delays, ‘poor’ communication and a data leak

Round three of Boosting Female Founders was opened in May 2022, with expressions of interest (EOI) closing in October of the same year. Shortlisted applicants were supposed to progress to the next round, with the grants themselves being rolled out from February 2023.

DISR informed applicants in late 2022 that round three had been delayed. In an email seen by SmartCompany, applicants were told this had been pushed out again to June 2023.

A DISR spokesperson told SmartCompany back in March that the delay was due to the federal Government Spending Audit which looked into pledges made by the Morrison government. This resulted in the redirection of $197.7 million in ‘uncommitted funding’ from the Entrepreneurs’ Program.

“The [Boosting Female Founders] Initiative was considered under the Audit and as a result, the delivery of Round Three has been delayed,” the spokesperson said to SmartCompany at the time.

The information regarding the latest December-January date push is yet to be officially sent to all round three applicants. But apparently, this is par for the course for the program.

Several applicants told SmartCompany on condition of anonymity that information tends to be drip-fed to those asking for updates through emails, phone calls and the messaging function on the fund’s online portal.

“They don’t communicate. They don’t tell you. I had to ring up several times to speak to different people to find out that actually it’s on hold,” one source said regarding the original delay in 2022.

According to another source, information was passed around unofficially through the community of applicants.

“We were trying to take every angle we could to get as much as information as possible. I was literally emailing them once a week,” they said.

“You get the official communication like six weeks after you’ve heard from 10 other people what’s going on.”

But this hasn’t been the only issue with communication.

In early November hundreds of applicants from various BFF rounds received an email from the department, asking them to complete a 15-20 minute feedback survey.

Recipients included a mixture of current applicants as well as those who had been successful and unsuccessful in previous rounds of the program.

Several of the applicants that SmartCompany spoke to found the survey to be in poor taste considering the round three delays.

The vitriol of some applicants was further exacerbated by the fact that the survey was sent with recipients cc’d in, exposing all of their email addresses.

“I assume I’m not the only applicant to have today received an email requesting feedback on the process, via a ‘15-20 minutes’ survey,” one applicant said to SmartCompany.

“Not only is this inappropriate seeing as no grant decisions have been communicated yet and are yet again delayed — we have all been sitting on matched funding since early 2022.

“But also, to add insult to injury, [the email] was sent and recalled no fewer than FIVE times.”

According to sources, the emails were sent and recalled all within a 70-minute period.

Boosting Female Founders has been wrought with problems for years

Unfortunately, this isn’t the first time that the program has been subject to controversy.

The eligibility criteria for the program was called into question while still being run by the Morrison government.

One startup was excluded due to the program attributing half of its equity to their husbands, who were not involved in the business.

Other founding teams with an even gender split also claimed to be excluded by outside investment from men muddied the gender-equity balance outlined in the program’s eligibility criteria.

Despite this, and rather ironically, some of the largest grants bestowed on startups in round two of the program had to be re-examined when allegations were levelled at them for not being majority female-founded or run. In some cases, they were said to have rejigged the structure to be eligible for the grant program.

Round two also had its own problems with communication. Back in July 2021, hundreds of applicants received an email congratulating them on successfully making it through the EOI stage of the program. Within hours it was retracted.

Is boosting female founders just government lip service at this point?

“The Coalition Government is committed to supporting women in the early stages of their entrepreneurial journey,” former Minister for Women, Kelly O’Dwyer, said when the BFF initiative was announced in 2018.

“Currently, businesses led by women find it more difficult to access finance than those led by men.

“We want to give them the best opportunity to succeed so that they can build financial security for themselves and their families, and grow the Australian economy.”

Five years on, the program has certainly dished out millions in grants to startups. But considering the consistent issues it has had across two governments, one could argue that in its current state it is not only failing to “boost” female founders, it’s actively hindering their success.

Forcing founders of early-stage startups to sit on matched funding — to the tune of hundreds of thousands of dollars in some cases — is significant, particularly across a 12 to 18 month period, depending on which stage an individual startup got it.

And this practice is certainly not what the department is out there preaching. In addition to spearheading the government’s Diversity in STEM Review — which aims to “recommend how the Australian Government can support change so that people can access and feel they belong within STEM education, careers and industries” — Minister for Industry and Science Ed Husic has been vocal about more money be afforded to women-led businesses.

“In the National Reconstruction Fund, when I talk about diversity, one of the things that we’re telling the fund to do is that they need to actually work with VCs to provide funds for female founders and people who usually find it hard to get that money. We will make that happen, too,” Minister Ed Husic said at a Startmate event in Sydney on October 19.

And yet here is Boosting Female Founders, under the stewardship of Minister Husic’s department, not only delaying access to grants but locking up funds. This has left these businesses with a choice to continue to sit on this funding or give up on the grant.

“We understand that your circumstances may have changed and if you no longer wish to continue with your application for this round, please contact the team… to withdraw your application,” an email sent to applicants in March said.

“I think it’s appalling. And the irony is that whenever we look at the lack of funding for female founders, and it is an egregiously low number, the reason given is always the low pool of female founders,” an applicant said to SmartCompany.

According to the source, there are rumours of DISR being inundated with applications which is contributing to the long delays.

“And yet, the reason why [women] are so underfunded is because there’s not enough of us. So which one is it?”

What is clear is the consistent issues and continued delays with the program have left a sour taste in the mouths of the women the program claims to champion.

“It’s an incredible sense of being let down and being under-supported. Then there’s the fact that it’s hindering our progress. It’s not just about not being able to get funding. It’s that it is causing us problems,” one source said regarding the matched funding.

Another said that Boosting Female Founders is doing little to nothing to help actual innovation by women in Australia.

“I’ve not heard anyone say a good word about that whole system. And these are all of the most innovative female founders in the country,” said another.

“I mentor a bunch of founders and I would never suggest that any of them include this in their plans. I would never even suggest that they waste their time on this.”