Female funding initiatives are changing the game

It's time to truly diversify your investments.

Last year, movements like #MeToo put diversity and inclusion front and centre on the global stage.

In Australia, 2018 saw progress on the Australian Institute of Company Directors campaign for all boards to have at least 30 per cent female representation, a goal we got pretty close to (most ASX200 boards have now met this target)

But there's one area where we still have a long way to go – investing.

According to US business magazine Fast Company, enterprises led by women received just 2 per cent of all venture capital funding in the US last year, while women of colour in the US receive just 0.2 per cent.

As the saying goes, if you don't like how the table is set, flip the table.

Flipping the table

One VC flipping the table to great success is Arlan Hamilton, founder of Backstage Capital in the US. Ms Hamilton isn't one of the usual suspects when it comes to getting funded in Silicon Valley, let alone one who starts their own VC firm. Not only is she female, African-American and queer, she started her VC fund while homeless.

Profiled in season seven of the StartUp podcast from the US, Ms Hamilton argues that women, especially women of colour, have to be 10 times better and work 10 times harder than their male counterparts, so they're actually a much safer bet in terms of investment.

In other words, by not investing in women of colour, VCs are leaving a huge amount of money on the table. For Ms. Hamilton, flipping the table is not just about changing the world, but also getting rich.

A new playing field
Another female-led initiative creating the new future of investing is SheEO (http://sheeo.world), which uses a novel and empowering funding model to support female entrepreneurs on a number of fronts.

SheEO country lead for Australia and the head of Telstra accelerator muru-D, Julie Trell, is optimistic about the opportunities these new funding mechanisms can provide.

At the risk of mixing metaphors, it seems SheEO is flipping the table in terms of the playing field analogy.

"Rather than levelling the playing field, we are creating an entirely new field and supporting women on their own terms," Ms Trell told Business News.

Founded in Toronto by Vicky Saunders, SheEO has now expanded to the US, New Zealand and most recently Australia.

In each of these countries, 500 women – called activators – engage in an act of 'radical generosity'. Each activator contributes $1,100, which is pooled into a fund.

The money is then loaned, interest free, to female entrepreneurs selected by the activators. This means the activators are not only providing the funding, but being part of the process of deciding where their money is invested.

Even better, SheEO is creating a perpetual, growing fund. As the loans are paid back, they're then loaned again to fund even more female-led ventures.

SheEO's facilitation of radical generosity has been highly successful. Since it launched three years ago, SheEO has loaned $3 million and supported 32 female-led ventures.

Providing another data point for Ms Hamilton's thesis that women have to be 10 times better, all SheEO's ventures have had a 100 per cent repayment rate, with an average revenue growth in the triple digits.

"It's a new way of ensuring capital flows effectively – especially to and by women." Ms Trell said.

"I also like to describe it as a gateway drug to investing."

100 Women
The SheEO model is similar to a giving circle, like WA's 100 Women (http://100women.com.au), co-founded by Alicia Curtis.

"Giving circles like 100 Women are tapping into new sources of funding and putting the community itself at the helm," Ms Curtis said.

"We educate people about how we can invest for social impact and it often ignites a lifetime of giving."

Call to action

With SheEO only having launched in Australia at the beginning of this year, there are still spots for more activators, especially in Western Australia.

"It's an opportunity for WA to get in front or at least on the same page of Australia as we get the SheEO momentum moving." Ms Trell said.

"The Australian SheEO Venture semi-finalists will be announced on February 5, and the next round of activator voting to select the Top SheEO Ventures will begin February 28."

100 Women also accepts new investors any time, and will be celebrating its sixth birthday with an event in March.

The future of investing is diverse.

Are you in?