It was slim pickings for women in this year’s federal budget. But, in papers devoid of childcare support and lacking boosters for women-dominated sectors, there was a small glimmer of light: grant funding for women entrepreneurs.
Piloted for 2020, the Boosting Female Founders Initiative — or BFF Initiative — offers grants of between $25,000 and $480,000 to help women entrepreneurs expand their business.
Grants are pegged for specific projects, and will cover 50% of project costs. Founders match the funding through private investment or industry partners.
The idea is to help stimulate women’s participation in business, encourage investment in women-led businesses, and improve access to capital for women. That’s intended to increase the number of startups headed up by women.
Initially, the scheme had $18 million in grants to play with, equally split over three years.
This year’s budget pledged a further $35.9 million over five years, starting in the 2020-21 financial year. So far so good.
But, once you dig into the details, the BFF Initiative has strict eligibility requirements that have the potential to exclude a lot of businesses we would typically consider to be ‘women-led’.
The scheme requires a startup to be “majority owned and led by women”, defining this as at least 50% owned by women.
Further, 50% of the founding team or senior managers — think C-suite — must be women.
That means a woman running a business with a male co-founder and a 50/50 ownership split would be eligible.
But, as soon as that startup raises even a small amount of capital from a male investor, and hands over any amount of equity, it loses eligibility.
It is no secret, after all, that the majority of early-stage angel investors in Australia are male, and most of the VC firms are owned and run, for the most part, by men.
And many VCs are focusing on addressing the issue — AirTree, for example, has launched its Explorer program, in a bid to diversify the pool of angel investors in Australia.
All of this is important work. But, we’re nowhere near gender parity in investment yet.
Most of the cash coming into Aussie startups is from the pockets of men.
Somehow, that has become a barrier to women-led startups accessing grants specifically designed to help them.
A hindrance, not a help
Earlier this year, Skye Theodorou, co-founder and chief of insurtech startup UpCover launched a petition, calling on Minister for Industry, Innovation, and Science and Minister Karen Andrews to reconsider the BFF Initiative criteria.
“The eligibility terms set hinder the very progress that the initiative pledges to make,” Theodorou wrote in the petition.
UpCover came through Antler’s inaugural start generator program last year. But, Theodorou had already been working on the business beforehand.
Through Antler, she met her now co-founder Anish Sinha, and secured her first $100,000 in investment, as she progressed to the second phase of the program.
Those two events were marks of success for UpCover, Theodorou tells SmartCompany. But now, they’ve made the business ineligible for the BFF grants package.
“A year ago, I needed a co-founder — that was my first big thing — and then I needed to raise some money,” Theodorou recalls.
“For those two things to make you ineligible, it’s actually almost like the grant is discriminatory,” she suggests.
“How does that make me any less of a female founder, because now I have 45% of my company?”
Theodorou feels the strict criteria undermines the very principle of the thing.
The point was to support early-stage startups, including those that already have investment and are gearing up for growth and scale, she suggests.
“Going from those origin principles to the final concept, it’s really confusing to me,” she says.
“At any stage in your business, to have more than 50% is really rare. And if you do, that might be indicating that you’re very early on in your journey,” she adds.
“The thing you should be celebrating, actually, is the fact you’ve got co-founders, and that you’ve raised investment. Those are the kind of businesses you probably should be doubling down on.”
Cortina McCurry, co-founder and chief of women’s health startup Caia is in a very similar position. McCurry also has an equal ownership split with her co-founder Rob Haggett, and secured funding through the very same Antler program.
“If the goal is to boost female founders, what they’re saying is it has to be an all-female team really,” McCurry says.
“There are a bunch of other women out there who might have been a single founder and then raised funds and reduced their majority share, or they have a male co-founder,” she says.
“If we really want to support female businesses, how do we take a hard look at what it’s going to take?”
Fuel for 500 founders?
A spokesperson from the Department of Industry, Science, Energy and Resources told SmartCompany the government is “committed to giving female-led businesses the best opportunity to succeed”.
“[The department] consulted widely on the design of this Initiative and heard that women entrepreneurs face a number of challenges in establishing and growing their startup businesses, including accessing capital and funding, and accessing support networks,” they added.
The first round of the program attracted more than 2,200 applications, the spokesperson said.
The department did not share how many businesses would progress to the second round of the application process, only that those applications are currently being reviewed by an independent all-women committee, and will be announced “in due course”.
However, the spokesperson also suggested the BFF Initiative has enough funding to support “more than 500” women-led businesses over the next five years.
It will also provide “up to 4,300 mentoring engagements”, they said.
In part two tomorrow, we get into the numbers, and try to figure out just how many women-led startups are excluded from the BFF Initiative, as well as how Theodorou has found a loophole.
We’ll also unpack exactly why this tight eligibility is so problematic, consider some of the broader implications, and chat with an all-women-led startup to see how such businesses fare.