1 00:00:04,080 --> 00:00:07,200 Adam Lang: Welcome to the Fear and Greed Daily interview. I'm Adam Lang. 2 00:00:07,710 --> 00:00:10,648 Adam Lang: We've talked on this podcast before about the gender imbalance 3 00:00:10,650 --> 00:00:14,489 Adam Lang: In the business world. Women are underrepresented in senior roles 4 00:00:14,940 --> 00:00:18,119 Adam Lang: and on boards of Australian companies. But how about this 5 00:00:18,119 --> 00:00:22,829 Adam Lang: for a shocking statistic. Apparently just 3% of venture capital 6 00:00:22,829 --> 00:00:26,940 Adam Lang: money goes to female founders. Scale Up Investors is an 7 00:00:26,940 --> 00:00:32,070 Adam Lang: angel syndicate network, investing in women- led Australian startups. Catherine 8 00:00:32,070 --> 00:00:35,608 Adam Lang: Robson is the chair of Scale Investors, and I'm pleased 9 00:00:35,609 --> 00:00:38,040 Adam Lang: to say my guest this morning. Catherine, welcome to Fear 10 00:00:38,040 --> 00:00:38,460 Adam Lang: and Greed. 11 00:00:39,030 --> 00:00:39,630 Catherine Robson: Hi Adam. 12 00:00:40,680 --> 00:00:45,269 Adam Lang: Good morning to you. 3%, that's pretty confronting. Why is 13 00:00:45,269 --> 00:00:46,050 Adam Lang: it so low? 14 00:00:47,219 --> 00:00:51,269 Catherine Robson: Partly it's specific to venture capital investing and partly it's 15 00:00:51,269 --> 00:00:55,380 Catherine Robson: reflective of some of those broader gender equity challenges that 16 00:00:55,380 --> 00:01:00,510 Catherine Robson: you referenced in your introduction. So venture capital investing is 17 00:01:00,510 --> 00:01:04,649 Catherine Robson: really about investing very early in a company's life cycle 18 00:01:04,860 --> 00:01:08,610 Catherine Robson: to capture massive potential for growth. And invariably they are 19 00:01:08,969 --> 00:01:14,729 Catherine Robson: technology or technology enabled businesses. And to capture those returns, 20 00:01:15,090 --> 00:01:18,390 Catherine Robson: you either need to be investing really, really early, not 21 00:01:18,450 --> 00:01:22,590 Catherine Robson: long after it's an idea, or investing in something that's 22 00:01:22,590 --> 00:01:26,399 Catherine Robson: really, really new. And so the traditional metrics that an 23 00:01:26,400 --> 00:01:31,620 Catherine Robson: investor might use, the discounted cash flow analysis or sum- of- the- 24 00:01:31,620 --> 00:01:34,620 Catherine Robson: parts valuation, they're really not relevant when you're thinking about 25 00:01:34,620 --> 00:01:38,190 Catherine Robson: what might make a good venture investment. And so often 26 00:01:38,190 --> 00:01:41,098 Catherine Robson: what venture investors are looking for is what we call 27 00:01:41,099 --> 00:01:45,449 Catherine Robson: patent recognition. So when you see a founder and their 28 00:01:45,450 --> 00:01:48,510 Catherine Robson: idea for a company, does it look like another founder 29 00:01:48,510 --> 00:01:52,170 Catherine Robson: and company that's been massively successful? So you think of 30 00:01:52,170 --> 00:01:55,890 Catherine Robson: the most well known examples. Do they look like Mark 31 00:01:55,890 --> 00:01:58,529 Catherine Robson: Zuckerberg at the early stage of Facebook? Do they look 32 00:01:58,530 --> 00:02:02,999 Catherine Robson: like Sergey Brin at the beginning of Google? And so 33 00:02:03,000 --> 00:02:05,879 Catherine Robson: what you see is we tend to just keep investing 34 00:02:05,879 --> 00:02:08,609 Catherine Robson: in things that look a bit the same. And so 35 00:02:08,610 --> 00:02:14,880 Catherine Robson: you find that venture investors keep investing in male- led 36 00:02:14,970 --> 00:02:20,189 Catherine Robson: technology businesses. It makes it really difficult for women if 37 00:02:20,190 --> 00:02:23,490 Catherine Robson: they're coming with ideas that are a bit different, so 38 00:02:23,490 --> 00:02:28,020 Catherine Robson: often women founders are solving problems that relate to the 39 00:02:28,020 --> 00:02:31,530 Catherine Robson: 50% of the population of which they're a part. And 40 00:02:31,530 --> 00:02:37,380 Catherine Robson: so often, that's a problem that male venture investors don't 41 00:02:37,380 --> 00:02:40,230 Catherine Robson: have a very good understanding of, or male founders in 42 00:02:40,230 --> 00:02:44,550 Catherine Robson: the past haven't been looking to solve. I think they're 43 00:02:44,550 --> 00:02:49,500 Catherine Robson: the venture specific things, but I think the broader gender 44 00:02:49,800 --> 00:02:54,450 Catherine Robson: issue is how we see men and women differently. So 45 00:02:55,559 --> 00:03:00,840 Catherine Robson: confidence and assertiveness is positively correlated to likability for men, 46 00:03:01,169 --> 00:03:04,020 Catherine Robson: but negatively correlated for women. And so the sort of 47 00:03:04,110 --> 00:03:08,669 Catherine Robson: questions that we ask male and female founders is slightly 48 00:03:08,669 --> 00:03:10,950 Catherine Robson: different. And I think that leads to some different outcomes 49 00:03:10,950 --> 00:03:11,400 Catherine Robson: as well. 50 00:03:11,969 --> 00:03:15,630 Adam Lang: That's really interesting. So a very blunt way of asking 51 00:03:15,630 --> 00:03:18,750 Adam Lang: the question is, do you think there's a bias against women- 52 00:03:18,779 --> 00:03:21,660 Adam Lang: led startups? And in your answer just then what I'm hearing 53 00:03:21,660 --> 00:03:24,930 Adam Lang: is there's just not enough role modeling for women nor 54 00:03:24,930 --> 00:03:28,319 Adam Lang: accepting of women at this point in time as founders. 55 00:03:28,650 --> 00:03:31,739 Adam Lang: But is part of the problem that there's just fewer 56 00:03:31,770 --> 00:03:35,789 Adam Lang: women founders to begin with, because there are too many obstacles? 57 00:03:36,960 --> 00:03:40,890 Catherine Robson: I'm not sure if the pipeline problem is the biggest 58 00:03:40,890 --> 00:03:45,209 Catherine Robson: problem, if I'm honest. And certainly at Scale Investors, we are 59 00:03:45,210 --> 00:03:48,839 Catherine Robson: just blown away by the number and quality of women- 60 00:03:48,840 --> 00:03:52,229 Catherine Robson: led businesses and gender diverse teams that we see, that 61 00:03:52,230 --> 00:03:56,520 Catherine Robson: are solving really big global problems and have the potential 62 00:03:56,520 --> 00:04:02,849 Catherine Robson: to be really profitable, accretive returning investments for investors. So 63 00:04:02,849 --> 00:04:05,820 Catherine Robson: the pipeline I don't think is the main challenge. I 64 00:04:05,820 --> 00:04:09,569 Catherine Robson: think where we are missing women is in the investor 65 00:04:09,570 --> 00:04:13,650 Catherine Robson: community. The number of people who are writing checks to 66 00:04:13,890 --> 00:04:17,850 Catherine Robson: put into companies, there's a very small proportion of both 67 00:04:17,880 --> 00:04:22,139 Catherine Robson: individual and professional investors who are women. Then as I 68 00:04:22,139 --> 00:04:27,450 Catherine Robson: said, I think it's partly how we filter for companies, 69 00:04:27,450 --> 00:04:31,920 Catherine Robson: the process we go through to assess whether a venture 70 00:04:32,430 --> 00:04:37,500 Catherine Robson: opportunity is really worth investing in. So the questions we 71 00:04:37,500 --> 00:04:42,240 Catherine Robson: ask male founders are often about, what's the blue sky? What's 72 00:04:42,240 --> 00:04:47,430 Catherine Robson: the big potential opportunity here? And funnily enough, the unconscious 73 00:04:47,430 --> 00:04:50,760 Catherine Robson: bias that both women and men investors fall into is 74 00:04:50,760 --> 00:04:55,740 Catherine Robson: often asking female founders, what's the risk and challenge to 75 00:04:55,740 --> 00:04:59,159 Catherine Robson: the idea that you have? And so you talk about 76 00:04:59,219 --> 00:05:03,509 Catherine Robson: bias, Adam, I think mostly it's not conscious, it's very 77 00:05:03,509 --> 00:05:06,389 Catherine Robson: subtle and quite unconscious. 78 00:05:06,809 --> 00:05:10,620 Adam Lang: That is really interesting. And related within that is the most 79 00:05:10,620 --> 00:05:14,400 Adam Lang: famous female- led Australian startups in recent years would probably 80 00:05:14,400 --> 00:05:18,690 Adam Lang: be Canva, led by Melanie Perkins and Cliff Obrecht. They 81 00:05:18,690 --> 00:05:21,270 Adam Lang: were rejected by something like a hundred venture capital funds 82 00:05:21,270 --> 00:05:25,470 Adam Lang: before securing financial backing. Does this kind of success story 83 00:05:25,470 --> 00:05:28,770 Adam Lang: help to show the huge potential of female- led startups? 84 00:05:29,250 --> 00:05:33,719 Catherine Robson: It absolutely does. And I think part of solving this 85 00:05:33,719 --> 00:05:37,589 Catherine Robson: problem is about demonstrating that investing in women- led businesses 86 00:05:37,620 --> 00:05:40,618 Catherine Robson: is not just a good thing to do. It's a 87 00:05:40,619 --> 00:05:45,960 Catherine Robson: compelling economic opportunity. So in our portfolio at Scale Investors, 88 00:05:46,380 --> 00:05:49,560 Catherine Robson: one of our most successful investments was a company called 89 00:05:49,560 --> 00:05:54,089 Catherine Robson: Trademark Vision. And for each dollar our investors invested in 90 00:05:54,089 --> 00:05:59,459 Catherine Robson: that company, they received a $ 30 return, so a 30X 91 00:05:59,459 --> 00:06:03,660 Catherine Robson: return when that company was sold to a US multinational company. 92 00:06:04,380 --> 00:06:07,170 Catherine Robson: Which is fabulous, but I think we use it as 93 00:06:07,170 --> 00:06:12,630 Catherine Robson: an example to demonstrate that it is possible, but also it's 94 00:06:12,809 --> 00:06:18,479 Catherine Robson: really attractive because there's fewer investors in this space. So 95 00:06:18,480 --> 00:06:22,620 Catherine Robson: you're more likely to find that there's a better pool 96 00:06:22,650 --> 00:06:28,589 Catherine Robson: of opportunities at better valuations. And also we find, and 97 00:06:28,589 --> 00:06:31,949 Catherine Robson: Trademark Vision was an example of this, is that female 98 00:06:31,950 --> 00:06:35,790 Catherine Robson: founders, often because they find it so difficult, and as 99 00:06:35,790 --> 00:06:38,880 Catherine Robson: you say that the Canva team were rejected so often, 100 00:06:39,060 --> 00:06:42,779 Catherine Robson: once they do raise capital, they're very economical with it. 101 00:06:43,140 --> 00:06:47,939 Catherine Robson: And that efficiency means that they raise less capital and investors experience lower 102 00:06:47,940 --> 00:06:50,940 Catherine Robson: levels of dilution. And so the ultimate return on exit 103 00:06:51,000 --> 00:06:54,000 Catherine Robson: is enhanced. So there's a whole lot of reasons why 104 00:06:54,000 --> 00:06:58,049 Catherine Robson: that role modeling is fantastic. And the more we can 105 00:06:58,050 --> 00:07:03,300 Catherine Robson: shine a light on those fabulous female entrepreneurs is a great idea. 106 00:07:03,960 --> 00:07:06,209 Adam Lang: Stay with me, Catherine. We'll be back in a minute. 107 00:07:12,389 --> 00:07:15,810 Adam Lang: I'm speaking to Catherine Robson, the chair of Scale Investors. 108 00:07:16,170 --> 00:07:20,730 Adam Lang: Scale Investors is leading the charge in backing female-fled startups. 109 00:07:21,059 --> 00:07:23,849 Adam Lang: Without revealing all your secret source, can you take me 110 00:07:23,849 --> 00:07:24,419 Adam Lang: through what you're doing? 111 00:07:26,369 --> 00:07:29,249 Catherine Robson: There's a few things. If we want to solve this 112 00:07:29,249 --> 00:07:33,210 Catherine Robson: problem, we have to get more money into the hands of companies 113 00:07:33,210 --> 00:07:36,720 Catherine Robson: early in their life cycle. So as investors, we're a 114 00:07:36,720 --> 00:07:40,919 Catherine Robson: group of private individuals and we are investing relatively small 115 00:07:40,920 --> 00:07:43,920 Catherine Robson: money, small checks, each of us, but when we put 116 00:07:43,920 --> 00:07:46,980 Catherine Robson: it together, it's a meaningful amount at an early stage 117 00:07:46,980 --> 00:07:50,100 Catherine Robson: for a company. And we're backing them not only with 118 00:07:50,100 --> 00:07:55,470 Catherine Robson: that capital, but also hopefully with support, through advice, through 119 00:07:55,530 --> 00:07:59,250 Catherine Robson: introducing our companies to our network, so that they find 120 00:07:59,250 --> 00:08:03,389 Catherine Robson: it easier to find customers or to hire staff or 121 00:08:03,389 --> 00:08:08,010 Catherine Robson: to expand globally for example. But I think also one 122 00:08:08,010 --> 00:08:11,310 Catherine Robson: of the things that we are seeing is that even 123 00:08:11,310 --> 00:08:15,719 Catherine Robson: when a female- led business raises some seed capital, they're 124 00:08:15,719 --> 00:08:18,719 Catherine Robson: challenged when they go to then raise bigger amounts of 125 00:08:18,719 --> 00:08:23,039 Catherine Robson: money to grow. And we've collaborated with Artesian to raise 126 00:08:23,039 --> 00:08:26,580 Catherine Robson: an institutional fund that then can provide some growth stage 127 00:08:26,580 --> 00:08:31,020 Catherine Robson: capital. That's the Female Leaders Venture Fund. And there are 128 00:08:31,020 --> 00:08:35,249 Catherine Robson: a couple of just fabulous Australian super funds, Hostplus and legalsuper, who 129 00:08:35,250 --> 00:08:39,989 Catherine Robson: are the cornerstone investors in that fund, which invests exclusively 130 00:08:40,350 --> 00:08:44,760 Catherine Robson: in Australian startups and also some startups from the Asia 131 00:08:44,760 --> 00:08:51,210 Catherine Robson: Pacific region who are dedicated to growing mostly through technology. 132 00:08:51,480 --> 00:08:55,620 Catherine Robson: And that's really great to be able to see companies 133 00:08:55,620 --> 00:08:58,020 Catherine Robson: have confidence that they can raise at the early stage 134 00:08:58,080 --> 00:09:01,920 Catherine Robson: and then access some growth stage capital. Then I think the final 135 00:09:01,920 --> 00:09:05,970 Catherine Robson: piece of the puzzle is to grow more great investors. 136 00:09:06,030 --> 00:09:09,358 Catherine Robson: So as I said, we find that there's a really 137 00:09:09,360 --> 00:09:14,069 Catherine Robson: limited number of women investors in the venture sector in 138 00:09:14,070 --> 00:09:17,100 Catherine Robson: Australia. The numbers are increasing a little bit, but at 139 00:09:17,100 --> 00:09:19,559 Catherine Robson: Scale we want to grow more of them. So we 140 00:09:19,679 --> 00:09:24,718 Catherine Robson: have developed an education program to help people who are 141 00:09:24,720 --> 00:09:27,270 Catherine Robson: new to venture investing. And it's quite a different space. 142 00:09:27,270 --> 00:09:30,090 Catherine Robson: It's different from investing in property or ASX shares, for 143 00:09:30,090 --> 00:09:34,108 Catherine Robson: example, to give them the skills to feel confident to 144 00:09:34,230 --> 00:09:37,770 Catherine Robson: make more venture investments, but also to be really great 145 00:09:37,770 --> 00:09:43,260 Catherine Robson: venture investors and support companies and the female founders in 146 00:09:43,260 --> 00:09:44,489 Catherine Robson: a really productive way. 147 00:09:45,300 --> 00:09:47,880 Adam Lang: Catherine, you've got a lot of great experience and you 148 00:09:47,880 --> 00:09:50,969 Adam Lang: would've seen a lot of pitches. When you're looking at 149 00:09:50,969 --> 00:09:54,840 Adam Lang: character and competence, what are the personal attributes of the 150 00:09:54,840 --> 00:09:57,478 Adam Lang: founders themselves that you're looking for? 151 00:09:58,350 --> 00:10:01,380 Catherine Robson: Look, I think the first is resilience and grit. So 152 00:10:01,380 --> 00:10:06,329 Catherine Robson: it's a very challenging road to choose to be an entrepreneur. 153 00:10:06,330 --> 00:10:09,449 Catherine Robson: There's lots of setbacks, and even if you work really, 154 00:10:09,450 --> 00:10:12,240 Catherine Robson: really hard, there's things beyond your control that mean you 155 00:10:12,600 --> 00:10:16,230 Catherine Robson: sometimes need to change or to do things differently to 156 00:10:16,230 --> 00:10:19,740 Catherine Robson: be successful. So someone who has the capability to get 157 00:10:19,740 --> 00:10:21,660 Catherine Robson: back up when they get knocked down is probably the 158 00:10:21,660 --> 00:10:24,389 Catherine Robson: first thing that we are looking for. I think connection 159 00:10:24,389 --> 00:10:27,900 Catherine Robson: to the problem and real passion around the problem that's 160 00:10:27,900 --> 00:10:31,800 Catherine Robson: being solved. So as I said earlier, often these entrepreneurs 161 00:10:31,800 --> 00:10:34,650 Catherine Robson: are solving a problem that no one else has yet 162 00:10:34,650 --> 00:10:37,260 Catherine Robson: been able to solve. So we're looking for people that 163 00:10:37,260 --> 00:10:39,809 Catherine Robson: have a unique insight into that problem or connection to 164 00:10:39,809 --> 00:10:43,440 Catherine Robson: that problem and almost to the point where they're so 165 00:10:43,440 --> 00:10:45,869 Catherine Robson: passionate about it, they can't really think or do anything 166 00:10:45,870 --> 00:10:48,899 Catherine Robson: else. They just want to keep working on solving that 167 00:10:48,900 --> 00:10:52,110 Catherine Robson: problem. And then I think the final thing is the 168 00:10:52,110 --> 00:10:57,480 Catherine Robson: capacity to learn from feedback. So when you're in that 169 00:10:57,540 --> 00:11:00,239 Catherine Robson: iterative cycle of trying to grow a product or grow 170 00:11:00,240 --> 00:11:03,719 Catherine Robson: a business, you need to be really able to take 171 00:11:03,719 --> 00:11:07,350 Catherine Robson: feedback from your customers, from your suppliers, from your investors, 172 00:11:07,380 --> 00:11:11,880 Catherine Robson: from your board members, and be able to synthesize that 173 00:11:11,880 --> 00:11:16,290 Catherine Robson: to work out what's really useful, what is irrelevant, and 174 00:11:16,290 --> 00:11:19,829 Catherine Robson: that you can discard, and then keep using that to improve 175 00:11:19,830 --> 00:11:23,339 Catherine Robson: your personal performance as a founder with the products that 176 00:11:23,340 --> 00:11:23,910 Catherine Robson: you're working on. 177 00:11:24,990 --> 00:11:28,770 Adam Lang: Catherine, it sounds like a really supportive environment and formula 178 00:11:28,830 --> 00:11:32,100 Adam Lang: you're speaking about there. Do you think we'll ever reach 179 00:11:32,160 --> 00:11:33,990 Adam Lang: gender equality in the startup world? 180 00:11:35,429 --> 00:11:39,600 Catherine Robson: I really hope so, Adam. I think there's no reason 181 00:11:39,870 --> 00:11:46,439 Catherine Robson: why we wouldn't see women founders represented at similar levels, 182 00:11:46,679 --> 00:11:49,080 Catherine Robson: but I think it's less about women versus men and 183 00:11:49,080 --> 00:11:53,699 Catherine Robson: more about the benefits of diversity. So we don't exclude 184 00:11:53,700 --> 00:11:56,939 Catherine Robson: companies that come to us that have founding teams that 185 00:11:56,940 --> 00:12:01,108 Catherine Robson: have women and men, but more than if, it's the 186 00:12:01,109 --> 00:12:03,900 Catherine Robson: importance of why. So I think one of the things 187 00:12:03,900 --> 00:12:08,219 Catherine Robson: that keeps us awake as investors is thinking about the 188 00:12:08,220 --> 00:12:14,160 Catherine Robson: future of the decision making tools that increasingly decide outcomes 189 00:12:14,160 --> 00:12:17,219 Catherine Robson: in our lives. So who has access to capital, who 190 00:12:17,219 --> 00:12:23,100 Catherine Robson: has access to credit insurance, job opportunities, education. Many of 191 00:12:23,100 --> 00:12:29,310 Catherine Robson: those tools are being designed by quite homogeneous teams. So 192 00:12:29,429 --> 00:12:34,109 Catherine Robson: the decision making engines often reflect that the people who 193 00:12:34,109 --> 00:12:38,040 Catherine Robson: create them. And so we think it's super important that 194 00:12:38,040 --> 00:12:40,710 Catherine Robson: both women and men, but both broader than that, that 195 00:12:40,710 --> 00:12:43,800 Catherine Robson: there are diverse teams working on building these decision making 196 00:12:43,800 --> 00:12:47,039 Catherine Robson: engines. So the people whose lives are touched by them 197 00:12:47,940 --> 00:12:50,219 Catherine Robson: are reflective of the people who are creating them. 198 00:12:51,030 --> 00:12:53,370 Adam Lang: We all win from greater diversity. Right. 199 00:12:53,789 --> 00:12:56,220 Catherine Robson: Well, I think that we see it in all sorts 200 00:12:56,220 --> 00:13:01,380 Catherine Robson: of domains. That diversity is not easy. Sometimes it doesn't 201 00:13:01,380 --> 00:13:05,340 Catherine Robson: feel comfortable listening to people who come from different perspectives, 202 00:13:05,639 --> 00:13:10,230 Catherine Robson: but the quality of the decisions are almost always enhanced 203 00:13:10,469 --> 00:13:13,169 Catherine Robson: by putting them through that sort of robust process. And 204 00:13:13,200 --> 00:13:15,870 Catherine Robson: I think that's what I've really loved about being involved 205 00:13:16,110 --> 00:13:21,330 Catherine Robson: with the Scale Network, is that because we're a group of individuals who 206 00:13:21,330 --> 00:13:24,630 Catherine Robson: are aligned around a central mission, but we come from 207 00:13:24,630 --> 00:13:28,889 Catherine Robson: lots of different backgrounds. Invariably, regardless of the business that's 208 00:13:28,889 --> 00:13:32,429 Catherine Robson: pitching to us, we have someone in our network who's 209 00:13:32,429 --> 00:13:35,309 Catherine Robson: a deep expert in that area and they can really 210 00:13:35,309 --> 00:13:38,400 Catherine Robson: help tease out whether this looks like it's going to 211 00:13:38,400 --> 00:13:40,980 Catherine Robson: be a successful investment or not. And then if we 212 00:13:40,980 --> 00:13:43,949 Catherine Robson: do decide to invest, then we've got someone or multiple 213 00:13:43,950 --> 00:13:47,848 Catherine Robson: people in our network that's really able to help the 214 00:13:47,850 --> 00:13:49,500 Catherine Robson: entrepreneur to grow their business. 215 00:13:50,040 --> 00:13:52,770 Adam Lang: Catherine, thank you very much for talking to Fear and Greed. 216 00:13:53,250 --> 00:13:54,179 Catherine Robson: Absolute pleasure, Adam. 217 00:13:54,840 --> 00:13:58,740 Adam Lang: That was Catherine Robson, the chair of Scale Investors. This 218 00:13:58,740 --> 00:14:01,110 Adam Lang: is The Fear and Greed Daily interview. Join us every 219 00:14:01,110 --> 00:14:03,839 Adam Lang: morning for the full episode of Fear and Greed, Australia's 220 00:14:03,839 --> 00:14:07,560 Adam Lang: most popular business podcast. I'm Adam Lang. Enjoy your day.