In the current cycle of promising well-funded startups filing for voluntary administration, is it the shake-up investors need to finally see what's always been in front of them...?

The current news cycle is peppered with stories about well-funded, much-loved startups heading for the precipice that is voluntary administration. 

An Australian eSports startup raised $5.3million last year. I'm confident they felt pretty good about life because (like most funded startups) they went on a recruiting spree. 

👉 a reported $750,000 annual salary for just one of the rostered teams competing in the competition
👉 a professional coach, team manager, strength and conditioning expert, dietitian, and mindfulness coach, as well as an apparel manager (all justifiable, I'm sure)
👉 former executive Marc Edwards from AFL team the Melbourne Demons to be CEO (sure, Marc may have accepted a salary less than he is used to, but I'm confident it still would have been sizeable for startup land)

Now... here we are; in the very next year, they have filed for voluntary administration with a small debt of only $200,000. It is honorable. This team obviously couldn't see a way out, so they've done the responsible thing and filed for help. 

I really hope they get the sale they are desperately seeking and end the day with a salaried role that gives them the time and space to recover from this ordeal. 

But here's where I get angry. News articles are trying to pass off the lack of financial sustainability as a business impacted by COVID-19 as the underlying problem. What utter BS! The pandemic has been a perfect time for gamers to get more screen time than ever before. 

What really happened?

This team appeared to burn through money like they were billionaires with a ready supply to refill bank accounts. Sure... it looks as though the founding team got drunk on the zeros in the bank account, but what annoys me more is this...

They will have had an advisory panel and investor representatives advising them, actually pushing them, to grow, grow, and grow, and with that level of intensity, they would need to spend, spend, and spend.

So, who is actually responsible for this startup going bust?

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What makes a small business develop into a big business is not spending, but saving and capital accumulation. 

Ludwig von Mises

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There is something to be said for planned, sustainable growth. You should stop and consider your business's legacy rather than buying into the profit-first ego-play and letting everything blow up in flames.

Promising startups filing for voluntary administration will likely catalyze two things. 

1. This one is definite... there will be a reduced flow of capital for startups seeking funding. Maybe investment will become constrained for all businesses.
2. A greater focus is given to women-led businesses, which are known to carry less risk. Well... we can all hope!

Let's face it: There is more than enough research available on the Internet that confirms what we women already know. We are excellent financial stewards and desire to achieve sustainable, long-term growth through impact.  

For those who are interested, take a look at the following:

• Project Sage 4.0 - Tracking Venture Capital, Private Equity, and Private Debt with a Gender Lens, co-written by Catalyst at Large and Wharton Social Impact Initiative. 
• Gender Smart - Unlocking Gender Smart Capital at Scale 
• The Criterion Institute - Bridging the Expertise of Gender and Finance through Investing in Women

Not only does the research support solid investment outcomes when the flow of capital makes its way to women, but frameworks make it easy by helping funders embed gender and/or diversity investment lens into their investment decision-making process. 

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Investing in women's lives is an investment in sustainable development, in human rights, in future generations, and consequently in our own long-term national interests. 

Liya Kebede

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If you're an investor looking for solid, sustainable growth that also supports companies making a profit for good, then I encourage you to look at this very small sample of wonderful, worthy businesses led by women. 

Mumamoo is a premium Australian-made and Owned Cow's Milk Formula developed by science and backed by Mums. It offers the first of its kind: the Mumamoo Milk Club. Being a part of the Mumamoo Milk Club means customers can schedule a recurring order of Mumamoo to arrive at their home in a time frame that suits them and their feeding needs.

https://mumamoo.com.au/

IDA Sports is sporting equipment (aka football boots) designed by women, for women. Until Laura and her co-founder Ben, women had no choice but to wear boots made for men or kids. Now, IDA sports ultimately gives players more options when it comes to comfortable, quality, and well-fitting footwear. Let's face it: Women athletes are also entitled to high-performance and comfortable gear.

https://www.idasports.com.au/

 Happy Planet Toys - Exciting and engaging eco-friendly toys made in Australia from recycled milk bottles. Creating a range of exciting, compelling, and uniquely Australian eco-friendly toys made from recycled plastic, providing families with a simple, sustainable alternative to new plastic toys. Their toys are designed with fun characters and functionality to encourage creative, open-ended play for toddlers and pre-schoolers.

https://happyplanettoys.com.au/ 

Weeding Women—For thirty years, they've been transforming and maintaining gardens across Perth, and they are ready to expand their model into other regions of Australia. This community of women offers pruning, weeding, fertilizing, and mulching, as well as full garden clean-ups, helping loyal customers stay on top of garden needs.

https://www.weedingwomen.com.au/ 

Maternity Consumer Network - a network of women advocating for the improvement of maternity care and better birth care, by educating maternal practitioners on the rights of mothers during childbirth with consent training. Informed consent in maternity care is a human right, yet access to safe, reliable midwifery care is reducing. 

https://www.maternityconsumernetwork.org.au/  

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In all realms of life, it takes courage to stretch your limits, express your power, and fulfill your potential.

Suze Orman

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Whilst we are seeing a correction in the valuation of high-growth tech startups and the flow of capital to them reducing, all is not lost. In fact, this might just work in favour of women-owned businesses and the legacy they are creating. 

Let's go!

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• With a business ready for growth
• And you want to know if you're ready to secure $100,000 or more in Grant funding 

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Author Bio

Hi... my name is Lisa Erhart. I am an Author and the Founder of Funding4Growth. I help women entrepreneurs secure $100,000 or more in external capital to accelerate their business growth and magnify their impact.