Back in July a conglomerate of Australia’s most prominent venture groups pledged to disclose their funding data into women-led startups. The idea was to give Australian firms the chance to publicly dissect their own funding diversity and, hopefully, put their money where their collective mouth is.
Thirteen names were on the list, alongside specific data criteria that would need to be provided for public disclosure. The good intentions were clear, as was the need for the move. As we see quite often from funding reports from the likes of Cut Through Ventures, the numbers surrounding investment into women-led startups can often seem positive, but are skewed by one or two large raises.
While cash flowing into the local ecosystem is a positive, particularly during such dire economic times, a couple of big injections don’t actually move the needle for funding diversity. One could argue that it helps veil the tough conversations and examinations of VC books.
So the announcement of this initiative was welcome. However, public details around the practical implementation of it were light. It left questions about the roadmap, reporting timelines, and how this data was to be displayed. After all, not all VCs have the same methods of reporting. Hell, not all names on the list were even VCs.
That surely made the entire thing difficult. Messy. It didn’t even have a name. At least not publicly.
A more generous perspective would be that it felt bootstrapped. And sometimes you need that. Someone to just do the damn thing rather than merely talking about it. You can figure out the finer details later.
And this is fine if it actually happens. But as many women in startup land — and business in general find – all talk and no action can be the par for the course.
The conversation around funding diversity is never far from the surface in the local ecosystem, particularly if you remain eagle-eyed on LinkedIn. But it did have a particular flare-up again over the past couple of weeks after we reported on Blackbird’s last 11 public investments being into all-male founding teams.
Incidentally, the number jumped to 12 after the $47 million Series A by Leonardo.Ai late last week. However, the streak has since been broken with Blackbird partaking in a $4.15 million seed round for Clove, which has a mixed gendered founding team.
The story led to renewed chats about funding splits in the industry, whether it’s fair to judge a firm on public announcements, and who is doing what locally to actually make a difference.
As it turns out when it comes to the July initiative (which Blackbird is a part of), which we now know is called Equity Clear, quite a lot has been happening beneath the surface.
Samar Mcheileh is the co-CEO of Scale Investors, as well as one of the founders of Equity Clear. In a recent phone call with SmartCompany, she divulged more on what has been happening behind the scenes.
There are now 22 Australian groups that have committed to disclosing their funding data — seven of which have already done so. This includes Airtree, which confirmed with SmartCompany that it will be refreshing its data publicly this month.
Other big names are etched on the list, including Blackbird, Giant Leap, Alberts, Climate Salad and Scale. There are also non-VC inclusions such as Tractor Ventures, Birchal and LaunchVic’s Alice Anderson Fund.
But there is a much larger proportion of groups that are interested in getting involved, with 45 attending Equity Clear’s last quarterly call in October.
“Our target is 100… because if you look at the Cut Through Ventures surveys that they do for early stage, they get between 150 and 200 respondents,” Mcheileh said.
Unlike Cut Through, Equity Clear isn’t including angel investment in its reporting repertoire.
“We’re targeting mainly venture funds and groups that have some sort of coordinated approach when it comes to early-stage investment,” Mcheileh said.
“So therefore, they will have an impact when it comes to the gender composition of where those dollars go. That will, in our opinion, make a difference. Because what is not measured doesn’t change.”
Equity Clear has developed custom templates for groups that want to get involved. This is a necessity because, as previously mentioned, different groups use a variety of tools, programs and CRMs.
“Unless there’s consistency in the reporting, then it doesn’t really mean a great deal,” Mcheileh said.
But that doesn’t mean everything is perfect. Equity Clear is aware that each group is starting from different positions, with unique levels of reporting and transparency. This is why there is yet to be a hard date around reporting timelines.
“We’re really encouraging everyone to not take perfection as the starting point… no one collects data perfectly,” Mcheileh said.
“So let’s just start with something. This is a really simple template for everyone to start using.”
In a document seen by SmartCompany, the template is broken down into all male-identifying, all female-identifying, and mixed teams.
Across these categories, it asks for the percentage of dollars invested, percentage of deals done, number of deals screened, and number of deals progressed.
It’s simple, and that’s by design. With a focus on key metrics and consistency, Equity Clear hopes to see 20 companies publicly disclosed by the first quarter of 2024.
While perfection isn’t the current goal, Equity Clear does have higher and more intricate expectations being communicated to the firms involved.
During the most recent quarterly call, Mcheileh said the next phase is for reporting on the investment team structure.
“Who these founders are talking to is really important,” Mcheileh said.
“We already know anecdotally that a lot of the bigger funds have employed a lot of women and diverse people at that kind of entry point. Far more women than what has traditionally been known.
“But really what we want to start seeing is the decision makers in those firms becoming far more diverse and we’re certainly seeing a bit of a shift there but not as as fast as it needs to go.”
According to Mcheileh, a template for this reporting will be sent to involved funds by the end of the year. She also mentions that Super funds already request this information from their Limited Partners (LPs), so Equity Clear wants to align on this information.
Equity Clear is also working on a side initiative to request the disclosure of investment team data from other “custodians of capital” in the industry, such as family offices and pension funds.
But it doesn’t just end with gender.
Another key metric moving forward is reporting on intersectional representation. Mcheileh brings up data from 2021, which was one of the biggest funding years ever seen in Australia.
“Only 0.7% went to women-only teams. And then for women of colour, it was 0.03%.”
“We need to take an intersectional approach and I think the majority of people on the [October] call that we were speaking to unanimously agree with that.”
Mcheileh said that Scale Investors is already collating data to track non-binary folk and founders, as well as those who identify as neurodivergent.
“Those things have come out in lots of studies in the US that have been done for founders and investors alike. It certainly does attract a different type of person to come into this sector.”
But rewinding to the present, Equity Clear is still in the process of making this all happen. More firms wanting to get involved is a boon, but has an administrative knock-on effect.
By the time Q1 of 2024 wraps, Equity Clear hopes to do a hard launch of the program, along with a website to provide information for those who want to get involved as well as a central location for data display.
“We have like 56 groups on board now. I need to manage all those groups and give them somewhere to go,” Mcheileh said.
“I need to make sure that we’re keeping things really consistent and super simple.”
That’s a great deal of work. It shouldn’t be lost on anyone that Mcheileh — alongside Lisa Fedorenko, Investment Manager at Alberts — have their own demanding day jobs.
Yes, it’s fantastic to see over 50 firms get involved, with Mcheileh confirming over 0ver 10 male principals attending the last quarterly call.
But before we start handing out cookies — let’s hope that the admin heralding this change does not just lay on the shoulders of busy women.
Senior Technology Journalist
A multi-award-winning journalist, Tegan has been reporting on technology, telecommunications and gaming for the past 10 years. She regularly appears on mainstream media channels as an expert tech commentator. Her previous roles include editor of Gizmodo Australia and global reviews editor at Finder. She has also served as a reporter and editor across Business Insider, Lifehacker and Kotaku Australia. Tegan was the co-host of one of the top technology podcasts in Australia, Queens of the Drone Age. You can find her on Twitter @Tegan_Writes.
