Ten out of 12 startups in the 2024 Techstars Tech Central Sydney accelerator had at least one woman founder. Managing Director Kirstin Hunter shares the three insights gleaned from delivering Australia’s most diverse accelerator cohort.
Earlier this month we wrapped up the 2024 Techstars Tech Central Sydney Accelerator with a demo day that looked a little different to what you might expect. No, I’m not talking about the confetti canons – I’m talking about the fact that 10 out of 12 startups (83%) had at least one woman founder, and all companies (100%) had diverse teams.
This is unheard of for an equity-backed accelerator in Australia, where men-only founder teams have taken home 87% of the venture capital funds allocated this year to date.
Why does this matter? Research shows that women founders are more capital efficient and deliver greater return on investment compared to men-only teams. As an investor, this makes it more likely that I’ll deliver outsized returns to my limited partners.
Here’s what we’ve learned from delivering the most diverse accelerator cohort in Australia.
Insight 1: Women wait, men prospect
You know that statistic that men will apply for a job once they meet 60% of the criteria but women wait until they meet 100%? This plays out in investment pitches too: more men-only teams will throw together an application to try their luck, whereas teams with at least one woman will wait until they can demonstrate material progress.
This impacted our investment process in two ways:
- More applications came from men-only teams (approx. 65% of 2024 applications); BUT
- The average quality of applications from men-only teams was lower (by almost a full point on our four-star system compared to teams with at least one woman).
Once we removed the lowest-scoring applications (scoring below 2/4), those that passed our quality hurdle were much more gender-neutral.
Lesson for investors: while men-only teams apply for investment funding in greater numbers, controlling for the quality of applications will deliver a more gender-neutral result.
Insight 2: The critical step is from application to interview
We invite the top ~25% of written applications to interview: this is the critical step in the investment process.
Many founders struggle to express their idea in written form – particularly those not from (male-dominated) careers like investment banking and management consulting, those who aren’t native English speakers, or those earlier in their careers.
Conversely, an interview allows founders to demonstrate their energy and passion – and allows the interviewer to delve deeper into things they don’t understand. Teams invited to interview don’t just get a second chance to impress, but also a medium in which they are better able to be impressive.
Lesson for investors: Each interview gives founder teams an opportunity to impress you in a format where they are better able to be impressive.
This is critically important because of the first insight above. I have heard many investors claim that they don’t have bias in their application process because teams with at least one woman are progressed to interview in the same proportions to which they are represented at application stage.
However, the fact that written applications aren’t actively penalised for having a woman founder does not go far enough. If the investor fails to control for the quality of applications, then they are statistically more likely to give that interview opportunity to lower quality applications from men-only teams over higher quality applications from teams with at least one woman.
Lesson for investors: if you fail to control for application quality prior to interview, your process is likely biased in a way that will favour weaker applications from men-only teams over stronger applications from teams with at least one woman.
Insight 3: How you interview matters.
Another important phenomenon is that investors ask different questions to founders of different genders. While male entrepreneurs are asked more promotional questions (e.g. growth, vision), female entrepreneurs are asked preventative questions (e.g. risk, challenges).
Promotional questions provide a greater opportunity to get an investor excited, which is more likely to result in funding.
I see this play out across a number of different forums: pitch competitions, mentoring sessions, and of course investor meetings. As a result, we are very specific in how we interview for the accelerator to give every founder the chance to make their best pitch.
Our first round interview focuses on ‘founder-problem fit’ and my unofficial goal is to get applicants to the point where they ‘nerd-out’ about their problem space – where their passion runs away from them.
Our second round interview digs deeper into the product, market and traction. I consciously ask a mix of preventative and promotional questions to all applicants, regardless of gender. Regardless of gender, I make a conscious effort to ensure that the founders feel comfortable in the interview even when I ask hard questions. My unofficial goal is that all applicants leave their interview desperately wanting a place in the accelerator, but knowing that even if they aren’t successful, they’ve been able to give their best pitch.
With this approach, we have created an even playing field which actually resulted in an increased representation of teams with at least one woman founder progressing to the final step of our process.
Lesson for investors: Create an interview environment that allows all applicants to put their best case forward by consciously and deliberately using preventative and promotional questions regardless of gender.
Final thoughts
It is an unavoidable truth that the venture capital system was designed by men, is upheld predominantly by men, and benefits predominantly men. This system deprives women founders the capital that they need to build thriving businesses, and it deprives investors (limited partners) from the phenomenal returns that could come from investing into these businesses.
Investors who aren’t actively interrogating how their own biases skew their investment decisions are doing their limited partners a disservice, potentially costing them huge returns. The tired excuse of “its a pipeline problem” just doesn’t cut it. Our experience shows that there is no shortage of incredible women founders building investible businesses if the investor is willing to truly examine the bias in their own process.
Kirstin Hunter is the Managing Director of the Techstars Tech Central Sydney Accelerator. Previously she was a co-founder and CEO at Future Super, and has held multiple executive, mentoring and non-executive director roles across the startup ecosystem.
