November 8, 2023
We all know the stats- they are dire.
In 2021, women only teams in Australia got 4% of venture funding. This rises to a mighty 17% if you include mixed teams. And the worst part is we’re flatlining as an industry, not improving.
18 months into my role at Paloma, I know it’s not as easy as just wanting change. It takes graft and commitment every single day. Let it slide for even a quarter and all your good work can be undone.
The good news is that the hard work does seem to be paying off:
👉 Last financial year 48% of the first calls I took had a least one woman co-founder.
👉 Satisfyingly this trickled down to our term sheets and over 60% of the deals we signed had a least one woman co-founder.
I’d call that a win.
My first commitment when I started last year was to our dealflow. My hypothesis was that if at least half the calls I took were with women, then we’d be increasing our exposure at the top of the funnel and we’d be seeing deals we might not have seen before.
I experimented a lot with how to increase the number of women I spoke to, and then crucially, how to move them along and to the right of the investment journey.
Here’s what I think has worked:
1. I made sure to give second chances. It’s often touted that women are less likely to build venture scale businesses. For whatever reason we are deemed to be more risk adverse. Personally I think that most ventures go through multiple pivots, business model changes and feedback loops before they are successful, regardless of the gender of the person at the helm. I do often hear pitches that are more aligned to a ‘lifestyle business’ than a ‘unicorn’ but often it’s not that these women don’t have the ambition to build a venture scale business, it’s just that the rules of VC are quite opaque from the outside. An $8m ARR business can seem like a success story, but probably won’t cut it when it comes to a venture capital investment decision. Sharing those rules early on in the game, giving the harsh truths, but also giving the opportunity for women to come back with a rebuttal, new research, new thinking or questions has paid off in my experience. It’s never ‘one and you’re done’.
2. I made sure it was known that we really care about this. I think being a woman myself has helped… I’d like to think that a first call with me is pretty unthreatening. But we’ve also put Paloma’s money where our mouth is. To give a couple of examples, I mentor at SheLovesTech (the worlds biggest competition for women in tech) and we sponsored Scale’s EducatED program this year. I think investing time and actual cash does go some way to show we’re serious about this stuff.
3. I made sure I had close relationships with other women in the industry. Globally only about 12% of investors are female. You can draw your own conclusions there. Sharing deal flow with other women in the industry, who also care deeply about this cause, meant good deals became more visible. What’s too early for one firm might be perfect for us at Paloma. Shout out to Women in VC Downunder who made finding these women in investment MUCH easier.
Last year our stats looked pretty good. But there’s no time to get complacent. At Paloma we only do around five deals a year and so it doesn’t take much for those stats to evaporate and all the hard work to be undone.
The reality is that gender equity in VC will not be solved for a long time. And that’s before we even consider other diversity metrics and intersectionality. To make a dent it must always be front of mind, always a first priority.
We might do well this year and worse next year, but it’s not for a lack of trying. Investing in women is a long term commitment and it’s one I’m glad we’re making at Paloma.
If you'd like to chat, feel free to get in touch using the links below, or at my personal LinkedIn here.