The City must find a way to back more women with venture capital funding

 
Geeta Sidhu-Robb
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Venture capital tends to support men disproportionately more than women (Source: Getty)

The UK is pretty dedicated when it comes to startup funding, with £1 in every £3 of government spending now being invested in small business.

But women are still drawing the short straw when they seek out the capital needed to kick-start their businesses.

Shockingly, female startups receive just three per cent of total funding from outside equity, while only 15 per cent of venture capital-backed companies have a female founder, according to research in the fintech magazine Disrupts.

With obvious gender inequality issues surrounding the venture capitalist industry, what other options are there for female entrepreneurs?

Men will need to spearhead a lot of this charge, as they tend to invest in the same rather than the opposite sex. No eye-rolling is needed here by the way, men are 86 per cent more likely to be venture capital funded than women.

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And, given the old boys network the venture capitalist occupation revolves around, it is no surprise that female-led startups in particular find it difficult to secure backing.

In fact, when researchers remove gender from a pitch, the results are alarmingly different. Experiments – such as one carried out by Harvard Business School in 2014 – show that when the sex of the "pitcher" is unknown, women have greater success.

Unsurprisingly, the gender pay gap is not only found in employment, but in VC circles too.

This prompts the question: how can we avoid it? Some banks and NGOs have become aware of this issue, and so have compiled initiatives for the encouragement and funding of female-led startups in response.

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However, these are few and far between, and often do not have the correct backing to really make a difference for women in the UK.

Some venture capitalists have hinted towards a sense of timidity among female entrepreneurs which prevents them from being able to trust in their earning potential.

Short courses could be a midway solution here, especially ones that teach women better pitching skills if the problem partly arises at pitching stage, and could even come from the generous budget allocated for small business.

But in the long-term, VCs must find their own ways to open their minds - and their wallets - to backing more women.

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