Untapped unicorns: It's time to close the scale-up investment gender gap

Juliet Rogan
Deborah Meaden
The vast majority of investment for growth companies – from VCs, on crowdfunding and from angel investors like Deborah Meaden – goes to men (Source: Getty)

Women are increasingly getting to the top of careers in which they were until recently unrepresented. Yet there’s a substantial gap in funding for female founded businesses with ambitions to scale. Untapped Unicorns – a report from the Female Founders Forum released today – looks at what can be done to turn this around.

The Female Founders Forum is a group of Britain’s most successful female entrepreneurs. It’s run by The Entrepreneurs Network, backed by Barclays, and counts Margot James MP, Sara Murray of Confused.com and Tamara Lohan of Mr & Mrs Smith among its members. Over the last 12 months, we’ve been looking at how to ensure more female entrepreneurs can access the funding to scale up.

Beauhurst data shows that, in 2016, 86 per cent of publicly-announced investment deals (including crowdfunding, venture capital, and angel investment) into growth companies involved firms without a single female founder, and just 14 per cent involved companies with at least one. When you break it down into cool hard cash, it’s even bleaker: £3.58bn (91 per cent) versus £358.4m (9 per cent).

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What can be done about this? First, the report calls on the government to provide more and better data on growth businesses; specifically, it suggests partnering with the UK Business Angels Association to provide statistics on returns offered by women-founded businesses at the angel level.

The government should also get behind the many excellent schemes out there to bring entrepreneurs into schools – such as Founders4Schools, which connects students with local business leaders.

Research suggests that 83 per cent of women who have started their own business have known someone else who has done so; the more female founders we can get into schools, the more chance we have of inspiring the next generation. In fact, as was raised during our regular roundtables, schools are critical to addressing the funding gap. As Marta Krupinska, co-founder of Azimo, said: “we raise our boys to be brave and our girls to be perfect”.

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But we can’t just leave it to government. In recent years, the number of female angels has more than quadrupled – thanks in large part to the rise of alternative finance – but the venture capital industry remains obstinately male; women make up just 7 per cent of partners at the world’s top 100 venture firms.

Research from Harvard University shows that a female name, picture or voice cut the odds of an idea receiving investment. We all have biases. The key is to have systems in place and people at hand to challenge them. The accelerator MassChallenge, for example, uses a sophisticated blind application process to ensure that it chooses its entrepreneurs based on merit.

Even the media has a role to play in the way they profile female entrepreneurs. Studies have shown that women tend to be less forthcoming about promoting their achievements. As such, unless journalists approach more reticent entrepreneurs (male and female), they will in effect be promoting more men than women.

Of course, those female entrepreneurs who do push themselves forward tend to get a bigger slice of the pie and are particularly inspiring for the next generation – we just need more of them. That’s one reason the next stage of the Female Founders Forum will see us focus on mentoring. We’re optimistic about the future – we just don’t want to wait for it.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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