Entrepreneur and investor Theresa Gattung is behind a new report highlighting the lack of investment in female-founded businesses.
Entrepreneur and investor Theresa Gattung is behind a new report highlighting the lack of investment in female-founded businesses.
Female founders are receiving less than 11 per cent of venture capital from public and private sources, despite typically generating twice as much revenue as male-owned start-ups - the former a finding that has not existed before today.
It’s the result of research initiated and personally funded by former Telecomchief executive and My Food Bag co-founder Theresa Gattung and investor and entrepreneur Jenny Rudd.
“I’m disappointed, but not surprised,” Gattung, who founded her own venture fund to invest in female-led start-ups, told the Herald.
“It’s just stupid,” said Rudd, an Enterprise Angels board member and Blackbird Ventures accelerator mentor.
Rudd said the research busted common “myths” among venture capital (VC) firms, including that they assessed all entrepreneur pitches equally, gave equal amounts of capital to entrepreneurs of different genders, or simply did not have females pitching ideas to them.
Rudd said the Tauranga-based VC firm Enterprise Angels (EA) received 18 per cent of its deal flow from female founders in 2022 and invested in none of them.
For every 100 start-ups it invested in, 11 were founded by women.
Support in the public sector was even more limited - for every 100 start-ups the Crown’s New Zealand Capital Growth Partners (NZCGP) invested in with taxpayer funds, seven were founded by women, compared with 72 by men and 22 of mixed-gender ownership (typically a couple).
“We cannot use public money to discriminate,” Rudd said, noting that both NZCGP and EA were keen to change and boldly allowed their data to be used as the basis of the research.
When asked if women perhaps formed similar business ideas given their life experiences and preferences, both Rudd and Gattung cried foul.
“Women shouldn’t only build businesses for women, and then allow men to build businesses for men and women,” Rudd said.
Gattung said women who pitched businesses or products in beauty and fashion probably received more funding - a phenomenon Rudd called “pattern-matching”.
“I actually don’t think that women have better ideas, or men have better ideas, that would be crazy to suggest that they do.
“It’s just when they get further down the line, the capital is allocated differently.”
Their report referenced other research on the gender investment gap, including a Harvard University study which found men who pitched the same business idea with the same content were 60 per cent more likely to receive funding, and a Boston Consulting Group report that found women-owned ventures generated 78 cents in revenue for every dollar invested, compared with 31 cents for male ventures.
In total, New Zealand was missing out on $32 billion worth of economic growth and job creation, according to Gattung and Rudd’s report.
The findings proved problems that Gattung often heard anecdotally from the female founders she backed - they weren’t receiving further funding because other VCs assumed they’d been funded by female investors for mere support, not because of the merit of their idea or ability.
The discrimination was compounded by the fact that few women worked in finance in New Zealand and did not typically hold the purse strings, Rudd said.
Co-funder of the Gender Investment Gap report Jenny Rudd is the founder of Dispute Buddy and a mentor to start-ups in accelerator programmes.
‘Feminist capitalist’
Gattung said as investors themselves, she and Rudd were part of the industry-wide problem.
“We’re not pointing the finger.”
But, from today, they wanted to kick-start the solution, with the aim of eradicating venture capital gender bias and improving capital returns in four years.
The latter was most important to both of them - this wasn’t really about gender, it was ultimately about making money.
“I’m a feminist capitalist!” Gattung said.
“If a group of VCs are like, ‘We want to ignore your data’, f***ing good on ‘em!” Rudd said.
“But they’re gonna miss out on outsized returns that everybody else is going to have by focusing on this under-represented, under-served, profitable sector.”
They wanted all New Zealand investment funds to immediately report on the gender make-up of the businesses they invested in, diversify their funds to ensure no more than 60 per cent of investment was given to a single gender and ensure women were represented on all investment committees and boards.
“This is an opportunity,” Gattung said.
And it was one she was taking personally.
“This is part of my legacy,” she said.
“If women don’t agitate for women, don’t fight for women, we can’t expect men to do it.”
Theresea Gattung (centre) was the first female chief executive of an NZX-listed company. She's pictured here in 2007 between then-Telecom New Zealand chairman Wayne Boyd (left) and chief financial officer Marko Bogoievski - who also now works in venture capital.
It’s only natural Gattung would be behind this report - she was the first female to become a chief executive of an NZX-listed company when she headed Telecom in the early 2000s.
In 2021, she funded the Theresa Gattung Chair of Women in Entrepreneurship within the University of Auckland Business School.
With her background in the corporate world, Gattung said she wanted to see the same diversity effort across the NZX top 100 companies applied to smaller businesses.
“There is not the same focus on the wealth generators of New Zealand coming through.”
When asked how the idea for the report came about, Gattung and Rudd couldn’t recall.
They wouldn’t reveal the full cost but put it in the tens of thousands, which was shared about equally between themselves, ANZ Bank, Craigs Investment Partners, Global Women and Enterprise Angels.
The pair were friends who had co-invested in businesses together.
“We start a lot of ideas - there’s a lot of stuff we’ve talked about that we haven’t done,” Rudd laughed.
They wouldn’t share the ideas with the Herald’s audience, even though we suggested they could be worth investing in.
Madison Reidy is the host of New Zealand’s only financial markets show, Markets with Madison. She joined the Herald in 2022 after working in investment and has covered business and economics for television and radio broadcasters.
