November 23, 2020

Who’s better at starting a business – men or women?

A fund set up to invest in businesses started by women has reached its $2 million target and has already invested in six startups.

Women entrepreneurs struggled to attract funding to the same level as their male counterparts, despite having been proven to perform better, said investor Cecilia Tarrant, chairwoman of the ArcAngels investor network group.

A study by US-based BCG (Boston Consulting Group) showed that for every investment dollar going into a female-founded startup, the company generated 78 cents, while male-founded startups generated just 31 cents, Tarrant said.

“There’s absolutely a bias towards male-led companies, and this bias, unconscious or conscious, that men are better at business.”

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There’s “absolutely” a bias towards male-led companies, says Cecilia Tarrant.

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There’s “absolutely” a bias towards male-led companies, says Cecilia Tarrant.

When raising capital, men would be asked questions focusing on potential gain, such as how much money they thought they could make.

Women, in contrast, were asked questions focusing on potential loss, for example how they would reduce the risk of losing money, said Tarrant.

“I think the situation in New Zealand is better than overseas, in part because we have an angel network that’s very collaborative and works together a lot and a lot of companies are syndicated.

“But it’s still harder. When a company’s doing really well, you just can’t deny that they’re being well-led.”

More than 40 per cent of the money invested in the ArcAngels fund, managed by Icehouse Ventures, came from male investors, including Sir Stephen Tindall’s K1W1 investment company.

“We’ve been very heartened by the number of people who’ve supported us,” said Tarrant.

“It’s like any first-time fund struggles to get some momentum. We started raising the fund in August of last year, so we’re very excited we’ve met our $2 million target essentially in a year.”

The fund planned to invest in 20 startups, and had already put money into six.

Sue de Bievre, founder of small business accounting firm Beany, was the first.

“Despite having metrics which put us in the top 20 per cent of SaaS (software-as-a-service) businesses globally, we struggled for a long time to raise capital from male investors,” de Bievre said.

The others included language learning application, Chatterize; mental health insights platform, Chnnl; airport fog dispersal systems company, Pyper Vision; and electric jet propulsion company Zerojet.

Investments ranged between $50,000-100,000, Tarrant said. Companies had to be female-led, have already raised 50 per cent of the capital they were seeking, and have a lead investor involved with the company, whether at board level or not.

“I think the more publicity we can get about the success that female-led companies have, then the more likely people are to be backing them and to consider backing them as the norm, not something unusual,” Tarrant said.

“All start-up companies are very focused on purpose, and I think that female-led companies are perhaps even more so.”

She did not expect to have too much trouble finding the remaining startups for the fund to invest in.

“We’ve already invested in six, there are three possibilities that we’re waiting to see how their fundraises go at the moment, and then I’m very confident that towards the end of next year we could be fully invested.

“Once we see this fund invested I certainly see raising other funds.”

Icehouse Ventures chief executive Robbie Paul said many of the most promising startups it had funded to date had female founders, including Brianne West at Ethique, and Sharesis co-founder Brooke Roberts.

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