Funding for Female Founders – Mind the Gap!
It’s shocking to think that the barriers faced by women entrepreneurs have given rise to a missed opportunity assessed as “more than 1 million missing businesses and £250 billion for the UK economy.”
Statistics for UK female entrepreneurs showed that deal size for female-founded companies in 2018 averaged £2.33m while for male-founded companies, deal size averaged £5.43m.
The above data comes from two reviews:
- The Alison Rose Review of Female Entrepreneurship commissioned by HM Treasury September 2018 (Alison Rose, Deputy CEO of NatWest Holdings and CEO, Commercial & Private Banking)
- Beauhurst, Funding statistics for UK female entrepreneurs, Hannah Skingle, 6th March 2019
Funding statistics indicate that funding for female founders lags very far behind the funding that goes to male founders and when it comes to business startups there is still a very small portion of female founders. However the direction of travel is positive, although data seems to indicate that when there is a contraction in funding female-founders are at the sharp end:
“There was a slump in both size and number of equity investments across the market in 2018, but male-founded companies only saw a 6% decrease in deal numbers, compared to 15% for female entrepreneurs. Only 16% of 2018’s equity deals went into female-founded companies, compared to 18% in 2016.” (Beauhurst, Funding statistics for UK female entrepreneurs)
“But women saw less of a decline in investment amounts, with a 12% decrease, compared to the 17% decrease experienced by men. Female entrepreneurs secured an 8% share of the amount of equity invested, down from 13% in 2015 and 2016, but on par with 2017.” (Beauhurst, Funding statistics for UK female entrepreneurs)
There is some optimism as more support mechanisms are being established some of which are expected to have an impact in 2019 – ranging “From AllBright Collective, who support women to achieve their career ambitions, to Diversity VC, who are dedicated to creating a fairer and more diverse venture capital industry; and sector specific initiatives like accelerateHER, a programme which addresses the under-representation of women in technology.” (Beauhurst, Funding statistics for UK female entrepreneurs)
But The Alison Rose Review identified five key barriers that lead to lower rates of entrepreneurship amongst women. These go well beyond barriers to securing funding although that is the first of the five barriers:
1. Low access and awareness of capital
2. Greater risk awareness
3. Perceived missing skills & experience
4. Disproportionate primary care responsibilities
5. Lack of relatable sponsorship/mentorship/role models.
Eight initiatives have been identified to address the imbalance and the Treasury, working with UK Finance, will establish a new ‘Investing in Female Entrepreneurs’ Code that will see banks and other financial institutions publish the gender split of the investments they make on an annual basis.
Are you ready to find out if you qualify or how much your R&D claims could be worth?