Culture

Are We Doing Enough to Support Women Entrepreneurs in High-Growth Ventures?

Funding biases, lack of representation, and regional differences affecting women entrepreneurs in the UK

By:

Jessica Hamilton

A woman at a whiteboard

Women in the UK are making moves and shaping the future of business.

They've got the passion and determination, but they're facing too many challenges on their way to success, and there's plenty of research backing this up.

The Women-led High-Growth Enterprise Taskforce Report breaks these concerns down in some detail, helping to:

  • Identify the main barriers women face in accessing high-growth capital.
  • Suggest ways to stimulate regional opportunities for women-led businesses, especially outside London.
  • Raise the profile of women-led high-growth entrepreneurship.

It lays out the hurdles and funding issues faced by female entrepreneurs and offers ideas on how to clear these roadblocks and inspire more women to dive into high-growth ventures.

"The group will make recommendations to Government on how to achieve our target of increasing the number of female entrepreneurs by half by 2030 – equivalent to 600,000 entrepreneurs," a government spokesperson said.

It's basically a shout-out to ramp up investment in women-led businesses, which could seriously boost the UK economy.

The Underrepresentation Challenge

As of the report, only 18% of high-growth enterprises include at least one woman on the founding team, while a staggering 82% are comprised of all-male teams.

This gap is not just a loss for women entrepreneurs but a missed opportunity for the economy at large, with the report underscoring the pressing issue of gender disparity in the entrepreneurial sector.

While female entrepreneurship is on the rise, women still lag behind in securing the necessary venture capital investments to scale their businesses.

In 2022, female entrepreneurs received less than 2% of the multi-billion pound investments made each year in the UK. And with women-led businesses making up only 5.5% of the UK’s high-growth firms, the potential for innovation and economic contribution from a diverse set of founders is not fully realised.

The report reveals that regional disparities further complicate the landscape, with areas outside London lacking in support and opportunities for women-led businesses.

Addressing these issues is not just about fairness or equality; it’s about tapping into a wellspring of untapped potential that could drive substantial economic growth.

Funding: The Persistent Barrier

Female funding for founders has historically faced challenges.

Despite progress in recent years, there's still a notable gap between the funding received by male and female founders.

This disparity can be attributed to various factors, including biases in the investment process, lack of access to networks, and stereotypes about female entrepreneurs.

Access to funding is not just important, but absolutely crucial for the survival and scaling of any high-growth enterprise. However, the playing field is not level for everyone.

According to data from various sources such as the British Business Bank and research firms like Beauhurst, female-founded startups receive a disproportionately small share of venture capital funding compared to their male counterparts.

For example:

  • Investment Disparity: Reports have shown that only a small fraction of venture capital funding goes to female-founded businesses in the UK. Despite women-led businesses performing as well as or even outperforming male-led ones in terms of returns, they still receive a much smaller portion of available investment.
  • Access to Early-Stage Funding: Female founders often face challenges in accessing early-stage funding, which is crucial for getting their businesses off the ground. This can be attributed to various factors such as biases in the investment process and a lack of access to networks and mentorship opportunities.
  • Investor Bias: There is evidence to suggest that unconscious biases among investors play a role in the funding gap. Studies have shown that female entrepreneurs are sometimes subjected to different questioning and evaluation criteria compared to their male counterparts, which can impact their ability to secure funding.

Female founders, in particular, often encounter significant hurdles when seeking financial backing.

The Women-led High-Growth Enterprise Taskforce Report, and other reports, highlight this.

No matter how much progress has been made, there's still an urgent need for change to support and empower female entrepreneurship.

Regional Disparities and the Way Forward

The clustering of economic opportunities and resources within metropolitan hubs such as London has created a challenging landscape for women entrepreneurs who reside in other parts of the UK.

This centralisation has led to a lack of necessary support for aspiring female founders in less urbanised regions, effectively side-lining a significant portion of potential entrepreneurial talent.

Recognising this imbalance, the Women-led High-Growth Enterprise Taskforce is advocating for a comprehensive, countrywide initiative.

The goal is to invigorate high-growth entrepreneurship among women across the entire United Kingdom, ensuring that female talent, irrespective of geographical location, is given the opportunity to thrive and receive the recognition it deserves.

Recommendations for Change

“I know the challenges that women, particularly those outside the London tech bubble, face when setting up a business, as do all the women on the Taskforce. We want to ensure every woman who wants to succeed as a high growth entrepreneur has a fair crack at doing so,” said Anne Boden, chair of the Taskforce and CEO and founder of Starling Bank.

To address these challenges, the Anne and the taskforce recommends several key actions:

  • Enhancing access to capital for women entrepreneurs through targeted funding programs.
  • Creating a supportive environment that encourages women to aim for high-growth ventures.
  • Increasing the visibility of successful women-led businesses to inspire and motivate others.

If we follow its suggestions, we can unleash the complete potential of women entrepreneurs, creating a space where their businesses can flourish and help boost the UK's economy.

It’s time to embrace the change and make the entrepreneurial journey an equitable one for all.

About The Author

A woman at a whiteboard
Jessica Hamilton
https://wearefounders.uk

Jessica is a seasoned writer with a startup flair, crafting stories that ignite innovation and inspire the entrepreneurial spirit.

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