The proportion of startup funding that went to startups with at least one male founder in 2024 was 98 per cent, with only two per cent left over for all-female founded startups, according to this year’s State of Startup Funding Report.
Speaking on the Women’s Agenda podcast about the report’s figures, co-founder of UrbanYou Noga Edelstein said that “at the moment, only 25 per cent of startups are founded by a woman. And so there’s this perceived pipeline issue. But that doesn’t mean there’s a lack of ambition.”
When pitching to investors, women often face barriers such as an increased level of scrutiny compared to men.
“Women get asked prevention questions, while men get asked promotion questions,” Edelstein says, adding that “instead of looking at the positives, women, they’ll always ask the women the negative case.”
For example, a man might get asked questions such as ‘how are you going to expand your business globally?’, and a woman will get asked ‘Have you even figured out how to acquire customers?’.
“It just becomes exponentially harder,” says Edelstein. “One of the really unfair things we’ve seen also, in a study by Harvard, is that even when a woman does go out and raise, if her investors are female, that counts doubly against her.”
“Everybody assumes that she only got funded because she’s a woman and got funded by a woman. So they discount her business.”
No stranger to raising impressive capital, Edelstein, a former tech company GC, launched UrbanYou in 2014, as a household services app based in Sydney, where people can book an appointment for a cleaning professional, gardener or handyman on-demand.
UrbanYou raised $2M in VC funding, and scaled nationwide to service over 50,000 households across Australia. The business was ultimately acquired by Domain-backed local services marketplace OneFlare.
Prior to acquisition, UrbanYou was named as one of Westpac’s 200 Businesses of Tomorrow. Noga exited from the business in March 2019 but continues with the Oneflare board.
Three tips for women seeking funding
There’s many systemic changes that need to occur to increase funding towards women-founded startups.
Nevertheless, having extensive personal experience working with investors, Edelstein has some practical advice for women seeking funding success.
She says that to maximise your chances of being funded, it’s important to be prepared and go into your fundraise with a solid plan.
Firstly, she says it’s important to do your due diligence on your investor list, as investors typically have a thesis on the types of industries they want to invest in, and invest at a particular stage (eg. seed vs. Stage A).
“If you have a consumer product, don’t waste time pitching to a VC that only invests in B2B SaaS. Create a target list, and be focused.”
Second, Edelstein says it’s important to plan for the amount of time and effort that goes into initially raising money.
“Raising money will take most of your capacity for a period of at least 3 months, and it can typically take up to 6 months to close a round,” she says.
“Make sure you plan for this, both in terms of runway, and ensure there are appropriate resources in place to run your company while your focus is on fundraising.”
“If an investor sees you are fast running out of runway, this does not bode well for either their confidence in your ability to manage cash flow, or the valuation they are likely to offer you.”
Third, Edelstein advises women to “know your numbers and present your financials confidently”.
“If you are pitching to VCs, they are looking for businesses that are going to 100X their investment – so show them how your business grows to become a unicorn,” she says.
“Never forget that investors are investing to make money, so being able to tell your business story through numbers is a crucial skill and can transform your ability to raise capital.”
Offering a personal example, Edelstein says that when she originally pitched UrbanYou to rooms filled with middle-aged male investors, she had to reframe the story she was presenting them to highlight her business’s impact through numbers.
“I told them how hard it was to find and book reliable household help. I got blank stares, they didn’t relate,” she says.
“But when I told them our business was doubling month on month, how big the market size was, that cleaning was a SaaS-like subscription product and our churn rates were ridiculously low, all of a sudden it clicked and we closed our raise.”
Overall, Edelstein wants women entrepreneurs to continue pushing forward with their business ideas.
“We know that women grow sustainable businesses,” she says. “They are better at building capital-efficient businesses. Back yourself. Surround yourself with the best networks and advisors that you can.”
“Make sure that you have support through someone you can lean on when times get tough. Know that it does get tough for everybody, but you will get through it. And know that there is a lot of work being done to try and change these metrics, so there is cause for positivity.”