On average, female-led businesses have managed to raise more money than their male competitors when it comes to crowdfunding.
- Birchal found it was female entrepreneurs who raised more money on its platform in 2020, pulling in 25% more in funding on average than male-led enterprises.
- Cult hot sauce brand Busnters managed to rake in $2 million in 2020, making it the largest female-led raise of the year.
- Visit Business Insider Australia’s homepage for more stories.
Raising investment can be tough as a business but one kind of founder appears to be finding surprising success.
In analysis of its 2020 equity rounds, crowdfunding platform Birchal found it was female entrepreneurs who are forging ahead, raising 25% more on average than male-led enterprises.
Managing director Matt Vitale said it was unsurprising that women were punching above their weight.
“To succeed with equity crowdfunding, you need to have an engaged community, or have the ability to engage a community to support you. The female founded businesses we have worked with at Birchal have been excellent at this,” Vitale told Business Insider Australia.
“They have been able to leverage their brand and audience of loyal customers to raise investment for the first time.”
In 2020, Australia’s budding crowdfunding scene raised $30 million, just down from $31 million the previous year, according to Birchal analysis.
Of that pie, 11 startups with a female founder or co-founder managed to nab around $8 million, or a little more than 26 cents of every dollar, despite making up around a fifth of all raises.
Cult hot sauce brand Bunsters topped that list. Started by Renae Bunster in 2015 and with names as memorable as ‘Shit the Bed’, the Australian brand raised $300,000 before the raise even went public. The round eventually hit $2 million — around four times the average raise — chipped in by more than 1500 investors.
It was followed by other female-led startups including sustainable fashion brand Outland Denim and medicinal cannabis company Compass Lifestyle Clinics ($1.3 million), as well as organic snack brand Whole Kids ($1.2 million).
Interestingly, female ride share company Shebah remains the largest all-time crowdfunding raise in Australia, raising $3 million, which included the single largest investment of $1 million by one particularly enthusiastic investor.
Of course, it’s not without its risks. Before Shebah, the largest raise in the country had been neobank Xinja, which on shutting down last month, admitted shares in it were “close to, or actually, zero”.
Vitale believes equity crowdfunding presents a level playing field, unlike traditional angel investing, where just 5% or less of funding is estimated to flow to female startups.
“To the extent that such bias exists, equity crowdfunding has the potential to neutralise it, by providing founders with an alternative source of capital,” he said. “We think this is a really exciting trend, that could help to improve representation of other minority groups among startup founders as well.”
Rollercoaster year for equity
The onset of the pandemic raised serious funding concerns in mid 2020, with most startups having just a three-month runway before the money drys up.
In the first six months of the year, crowdfunding platforms had less than half its usual crowdfunding raises go out the gate, while some platforms went to ground entirely.
However, as with other equity markets, there was a serious bounce in the second half of the year as the money began to flow again. The last quarter of 2020 alone, startups raised $13 million alone, or nearly half of the entire year’s funding.
With platforms like Birchal, Equities and OnMarket only active since 2018, the industry has managed to raise more than $75 million from more than 55,000 Australian investors.
Vitale believes next year’s figures will only be bigger as the industry develops and support a new generation of businesses.
“Equity crowdfunding has a huge role to play in this, and its democratising effect will help to ensure a more diverse spread of founders starting businesses, and investors building wealth by backing them.”
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