This month’s International Women’s Day celebrations prompted lots of warm words about the importance of boosting female entrepreneurship and supporting female small business directors. But new research suggests investors in the UK are failing to follow through on the rhetoric, with women-led start-up and scale-up businesses actually raising less money than last year than in 2016, both in cash terms and as a proportion of all fund-raising.
The data, published by The Entrepreneurs Network, and compiled with the support of growth company market research specialist Beauhurst, makes depressing reading for anyone hoping to see female entrepreneurs break through the glass ceiling of funding. It reveals that UK companies with at least one female founder raised £942m of funding during 2017, £1m less than in the previous year; the drop is the first recorded fall in funding for female founders since the report began in 2011.
The setback came despite a very significant rise in the total amount of funding raised by entrepreneurs in the UK last year. With funding for entrepreneurs as a whole almost doubling in 2017, the proportion of all funding invested in businesses with a female founder fell from 14.9 per cent in 2016 to 8.5 per cent last year.
It’s not all bad news. The report reveals that the highest amount raised by a company with at least one female founder almost tripled in 2017 compared with 2016; this was Monica Kalia, co-founder of Neyber, which raised £143.5m from investors; the total number of recorded deals for companies with at least one female founder also rose sharply, from 775 to 901.
Nevertheless, the relative shortage of funding for women is clear in the starkly different fortunes of male and female entrepreneurs last year. While the amounted raised by all-male founded companies was up by 55 per cent, the amount picked up by those with a female founder fell 0.1 per cent.
“The evidence is unequivocal: there is a growing disparity in funding between male and female entrepreneurs,” warned Sophie Jarvis, head of the Female Founders Forum. “There is significant evidence to support the fact that the funding gap is influenced to a large extent by unconscious biases from investors to the detriment of women.”
Annabel Denham, editor at The Entrepreneurs Network, said a variety of factors were to blame for the funding gap. “We still lack a level playing field, one that ensures female founders receive the sam opportunities as their male counterparts,” she said. “Frustratingly, women are subject to unconscious biases around funding, lack the confidence and role models to pursue careers in STEM [science, technology, engineering and manufacturing], and are erroneously perceived as having inadequate business experience and skills, and a reluctance to take risks.”
The report’s authors make five recommendations to help the UK begin to redress the balance:
- The Government should more regularly convene female entrepreneurs in the corridors of power – they would appreciate this formal validation of their efforts and the opportunity to share gender-specific barriers to scaling up;
- The Government should provide more data collection with detailed drop-off rates by age for girls entering STEM;
- Appropriate government bodies, such as Innovate UK, should engage in active support for mentoring schemes aimed at female founders and women in business;
- The media should profile more female entrepreneurs, especially those operating in traditionally male-dominated industries, with less focus on gender and more on these women as successful leaders of thriving businesses;
- Venture capital firms should work with organisations such as the British Venture Capital Association towards promoting diversity. Female VCs are three times more likely to invest in companies with at least one female founder.