Western Australia (WA) is headquarters to 650+ fast-growing companies (created after 2000). But Google searches revealed few are female-founded and less than 10% of the funding gets channeled to them. We were curious about why and knew that there was a massive missed opportunity. Especially because research shows that female-founded companies show higher ROI on some metrics and that targeted support to female founders increases their success rate (e.g., improve capital raising by 4x)[1].
In this context, a team of three MBA students from the INSEAD Business School (Harshita Rathi, Samdisha Punjani and Tatjana Brenninkmeijer) partnered with the Department of Jobs, Tourism, Science and Innovation (DJTSI) to understand the innovation ecosystem for female founders in WA[2]. Over 4 weeks, we conducted 30 interviews (founders, investors, ecosystem representatives, academics) and complemented it with rapid secondary research where relevant. In part 1 of this blog, we will present an overview of WA as a startup hub and status of female entrepreneurship.
Entrepreneurial pulse of WA
Three-fourths of WA’s economy comes from just four sectors. Encouraging innovation and making way for entrepreneurs to thrive here will help diversify the economy. With ecosystem activities increasing at least sixfold in the last decade[3], the growing momentum around entrepreneurship is palpable in Perth. There are numerous initiatives – underway and in development – to support entrepreneurship in WA. This includes support right from inculcating an entrepreneurial mindset among school-going children to accelerators and new funds supporting entrepreneurs’ growth ambitions. Compared to the other entrepreneurship ecosystems, WA is currently at a nascent stage. Using the Startup Ecosystem Lifecycle as a frame, WA is currently in the (mature) activation phase with fewer than 1,000 startups (albeit a growing number year on year) and a lot of focus on supporting the early stage. The ecosystem’s emphasis on growing the number of entrepreneurs and helping them at each stage as they grow is thus noteworthy. However, this also means that successful startups once they reach a certain scale look to more mature ecosystems to grow further – as demonstrated by the widely known case of Canva which moved from Perth to Sydney. This makes it hard to find those big success stories that can invite more capital, talent and keep inspiring the next generation of entrepreneurs in WA. The good news is there is a lot to build on and the depth and speed of such initiatives will determine how WA leapfrogs through the next phase of growth.
Status of female founders
Female founders i.e., those having at least having 1 female founder – comprise roughly 1 in 5 or 1 in 4 of the founders in WA, depending on whom you ask (exact number unknown). In WA, while number of female founders has been increasing – in-line with growing number of founders in WA – the proportion of female founders (as a percentage of total) has remained the same as per a few sources. To put this in context, globally, older data suggests women represent 2 out of 5 early-stage (active) entrepreneurs and 1 in 3 high-growth entrepreneur
In WA, many female founders we met were in their 30s and above, married (some have kids too), and were either born in WA or moved here for their or their partner’s career. Overwhelmingly they choose to stay in WA due to the lifestyle it has to offer, especially for families. Other reasons for starting and scaling in WA include its similarity to the US/ UK markets, nascency of its ecosystem (not every idea has been tried already) and the founders’ desire to give back to their community.
The motivations to start a business are as wide as the types of businesses these women start. They are driven by wanting to create a positive impact, transforming an industry, having more work flexibility, and/ or even making a passive income. Many of the founders interviewed spoke about the importance of having a supportive partner and a safety net to make the decision of diving into – or fighting to stay in – entrepreneurship. Female-founded businesses in WA range from deep medical technology and IoT to luxury fashion. Female founders are also notably making headways in areas where males do not exist in a big way (e.g., lifestyle, skincare, women’s health) and those that appeal to families (e.g., education). Remarkably, some of the women are in a tightly knit community where one could easily feel the warmth and willingness to help one another.
While capital available in WA is already low (only 2% of Venture Capital funding raised in Australia[5]), the status quo is much worse for women. They face the double whammy of low total capital as well as low capital allocated to them. Less than 3% of Venture Capital (VC) funding goes to female founded companies[6] although early data suggests the pipeline is healthier than the amount of VC investment going to them. VCs like Purpose Ventures and FundWA in Perth receive roughly ~30% of applications from female founders. Given this is only early data, a trend is hard to draw. Based on our interviews, there are sparingly few success stories of funding rounds to look at. Aside from venture capital, funding from corporates, family offices, and high net worth individuals is too little or quite case-dependent to make a dent in the startup ecosystem.
The intention to support these female founders and sensitivity to their differential needs somewhat exists in Perth. We often heard investors and accelerator-like programs “looking out for female founders” but how many female founders (including potential ones) it reaches and how this translates to tangible outcomes is yet to be seen. As WA endeavors to harness this potential, it has the opportunity to reshape its entrepreneurial narrative and emerge as a beacon of gender diversity and innovation.
Moreover, as we support these high-potential female entrepreneurs, we need to move past the false dichotomy of the successful male entrepreneur and the disadvantaged woman entrepreneur. This narrative overpowers another truth: that women entrepreneurs and business owners are building large, successful businesses in all industry sectors, with an enormous impact on their economies, communities and families.
[1] For every dollar of funding, women-founded start ups generate 78 cents (more than 2x compared to men-founded startups)
Sources: Deloitte, “Accelerating women founders”, 2022; (2) Techboard, “Female Founding Funding Report” (FY18-21); DJTSI, Dealroom
[2] While the scope if Western Australia, majority of the insights are focused on Perth due to availability of resources and connections in the limited time. This report is not representative of the regional WA outside of Perth.
[3] Indicative data from Innovative Society Index
[4] Framework borrowed from Startup Genome
[5] Folklore Ventures et al., State of Australian startup funding, 2022
[6] Deloitte, “Accelerating women founders”, 2022
INSEAD SUMMER STARTUP TOUR 
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