The funding leaderboard that was too depressing to keep publishing

Kirstin Hunter and Preeti Mohan had a reasonable theory: if you ranked Australian VC funds by how much they invested in women-founded companies, the laggards would feel the pressure and catch up. So they built Funding the Balance, tracked the funding announcements, and cut the data by fund.

The leaderboard worked perfectly. That was the problem.

What the data showed

First place went to the Alice Anderson Fund - which only invests in women-founded companies, so it topped the table by mandate. Second went to a Victorian government-owned fund that only invests in one state. The genuinely open, commercial funds - the ones the leaderboard was built to pressure - were fighting for third, and by Kirstin's recollection, third place required backing roughly two women-founded companies.

The table was so uniformly bad that instead of shaming anyone, it reassured everyone: nobody was doing worse than anybody else. "We're just empowering the system to do less by showing how bad everyone is," she says. They stopped publishing it.

The excuses move; the bias stays

Kirstin's read after a decade across founding, accelerating and now funding: first the line was that not enough women were applying. Then it became that women weren't applying as well. The excuse migrates every time it's answered, because it was never the real reason - the real reason is bias, conscious and unconscious, left unchecked.

Her question for the industry's money is the sharpest version of the argument: the LPs whose capital VCs deploy should be looking at the data showing diverse teams make better decisions and asking their fund managers directly why nearly all of it goes to teams with at least one man on them. Her fix is blunter than most are willing to say out loud: real quotas against the numbers.

The wildcard evidence

Here's the part that turns this from a fairness argument into an investing argument. Running two accelerator cohorts, Kirstin picked 12 companies at a time - and found that her last picks and reserve picks consistently went on to outperform her confident first picks. Her conclusion was humbling and freeing at once: nobody can pick winners.

Startup investing already runs on the power law - ten bets fail so one can pay for the lot. But diverse Founders don't get power-law treatment. Because their numbers are small, each one is treated as representative of their whole demographic, expected to prove certain success before getting a cheque - a standard no investor applies anywhere else, and one that isn't how investing works. If your first instinct is unreliable anyway, the rational move is to widen the bets - which is precisely where the underestimated Founders are.

Build the system instead

Kirstin's answer to a system that wouldn't fix itself was characteristic: stop waiting for permission and build the alternative. She now runs Birchal, where the crowd decides who deserves funding - and the crowd doesn't check whether you match the archetype.