By Jamie Smith, Momentum Intern

I have been captivated by the talent and the resilience of founders ever since I stepped foot into the start-up ecosystem a year and a half ago. It is such an exciting and ever changing space but not without its imperfections. One of the most significant challenges this ecosystem faces is the gender investment gap – the disparity inhibiting the full potential of women founders and the economic benefit they bring to New Zealand. I see this gap as a valuable opportunity for investors to address. This cannot happen, however, without women in leadership positions in the investment space. 

Research revealing the imbalance

A 2014 study by MIT found that when men and women pitch with the same startup, men receive 60% more investment than women. They describe no gender being “more entrepreneurial” than the other, yet describe the investment gap in length, both in the public and private sector. Looking here in New Zealand, government-backed investment fund NZ Growth Capital Partners reported only 7 women-founded startups for every 100 startups they invested into. 

Despite the lack of institutional support, women-led businesses report much higher returns on investment than their male-led counterparts. Startups with at least one woman founder outperform all-male teams by an impressive 63%. A study by Boston Consulting Group (2018) found that for every $1 invested into a business, women-led businesses generated $0.78 in revenue, compared to male-led businesses generating only $0.31. 

A 2023 report, “The Gender Investment Gap,” initiated and funded by Theresa Gattung and Jenny Rudd, highlights that the New Zealand GDP misses out on $32 billion due to the lack of women entrepreneurs. Other estimations for the economic potential of equalising New Zealand’s startup space range from $881 million (Deloitte study for Westpac) to $11 billion (Sharesies study, assuming 50% increase in women’s participation). By encouraging women’s participation and increasing investment in them will lead to immense personal and economic benefits. 

Finding the reasons for this gap and moving forward 

The reasons for this gap are complex and discussed extensively throughout contemporary literature and opinion pieces from individuals working in this area. They span from not having enough women in leadership positions at the VC partner or at management levels, through to the intersection of different facets of a woman’s individual identity. These facets include socioeconomic barriers, being a mother, and being a woman of colour. 

The lack of women in leadership positions within the investment industry plays a significant role in the funding disparities. An April 2023 article from Stuff highlights that there are only 6 women venture capital partners in New Zealand (there are now around 8 women partners), leading to skewed decision making processes. To address this, the Gender Investment Gap report recommends that no more than 60% of decision makers within an investment committee should be made up of one gender; however, this cannot happen without the capability being built from the bottom up. 

Women in Leadership and Capability Development

Capability development is already happening in both the private and public sector and diversity in these entry-level positions have increased. A great example of this happening is the Momentum Internship – how I landed at Matū. A large part of Momentum’s purpose is to develop rangatahi (young people) capability in the ecosystem and Matū has committed to assisting in this process and to equip young people with skills and knowledge.

My experience at Matū has been unexpected. I came into the internship, lacking confidence in my own abilities and I’m walking away having demonstrated my skills, new and old, and confidence in applying them elsewhere. This is because my managers and colleagues actively welcomed my opinion and input. I was encouraged to bring my perspective to the table – one which I thought was not “good enough” because I wasn’t experienced enough. A lot of the real value also came from the support that came with this internship; I could ask questions and reach out for help but was also encouraged to work autonomously to really ground myself in my opinion on the research being conducted. 

This support has been invaluable and we need more like it. There are other programmes such as the OnBoard programme, that are looking to encourage these processes across the industry. I do think that we need this to be at a more local and company-specific level to really maximise the impact and encourage the progression of this capability at an entry-level to leadership. 

So to investors, I urge you to champion the young and diverse voices in your organisation. Seek them out, listen to them, and let them guide you in how best to support their learning. Turning to the investment side, I also urge transparency around how your investment strategy considers the identity of founders and actionable steps that your company is taking to address the gender investment gap. 

To women within the ecosystem: find your support network, a group of women going through similar journeys, and support each other. There is space for all of us to exist and thrive in this area and contribute a heck of a lot of money to the New Zealand economy. Do not allow yourself to be framed in a deficit simply because a homogenous group of investors may be comparing you to the previous 10 male founders that have been pitching to them. 

“If women don’t agitate for women, don’t fight for women, we can’t expect men to do it” — Theresa Gattung

Jamie Smith is a research intern with Matū in 2023, and is currently completing her Masters in Public Policy at the University of Auckland. She has a background in medicinal and pharmaceutical chemistry, and has worked in both research impact and as a program analyst for Return on Science and Momentum.