Just 9 per cent of funding goes to women-led startups – it is crucial we correct this imbalance

 
Sam Smith
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Men are 86 per cent more likely than their female counterparts to raise venture capital funding (Source: Getty)

Last year, just 9 per cent of the investment that poured into UK startups went to companies with a female founder.

Meanwhile, male entrepreneurs were found to be 86 per cent more likely than their female counterparts to raise venture capital funding and 56 per cent more likely to win angel investment.

What this research tells us is that there is a vast resource of untapped entrepreneurial potential in Britain: while the proportion of the female working population founding a business soared from 3.7 per cent to 7.1 per cent between 2009 and 2012, it has slumped since. Had we maintained the levels of female entrepreneurship from 2012, the UK economy would have benefited to the tune of an estimated £1.35bn in 2015 alone.

Also of concern is that the UK lags behind its global counterparts when it comes to female entrepreneurship. In 2015, the UK saw 4.7 per cent of working women setting up their own businesses but in Canada, the US and the Netherlands, that figure was 13.5 per cent, 9.2 per cent, and 7.3 per cent, respectively.

Roots of the problem

At a recent FinnCap breakfast, we discussed the barriers to entrepreneurship, funding and business growth for women. Among the problems identified were a general lack in confidence, stemming from insufficient business education, and the absence of a space in which women founders can share knowledge and experiences, build connections and establish networks.

So what can be done to improve the situation?

Schools across the UK must roll out education programmes that cover the many different career options available, including business, commerciality and entrepreneurship.

We must also examine ingrained gender discrepancies in schools – uptake for girls in STEM subjects (science, tech, engineering and maths) is notoriously low in comparison to that for boys; and in business subjects, this imbalance can also be seen. It falls on the government to address these issues and, with our first female PM since Margaret Thatcher, now would be the ideal moment.

Role models

To bolster these educational programmes, it will be important to popularise female role models. All too often, Richard Branson, Alan Sugar, Mark Zuckerberg et al are held up as paragons of entrepreneurship and business success. Meanwhile, female-founder role models are scarce, with London Mayor Sadiq Khan recently stating that over two thirds of women can’t identify a female role model in their field. For younger generations, role models make entrepreneurship and business success seem achievable and help to highlight the many career options available for young people.

One in 10 women in the UK say they want to start their own business but do not act on it. At FinnCap’s breakfast, it was suggested that the best way to tackle female resistance to seeking out investment is to create a defined community in which business founders can share their knowledge and experiences. Companies such as AllBright are working towards building such a community, helping female founders to establish a network of contacts. Shared knowledge will help to demystify financing, and clue in those considering scaling up on how to pitch to investors; present a business plan; and decide which road to financing is the right choice.

Through education and driving a female-led entrepreneurial community, we can break down barriers to financing and business growth. Integral to this will be encouraging more women to become investors. We need to shift the dynamic of the investment world, so that it is more balanced and reflective of the world of business that we hope to create.

This is not merely a question of diversity but a question of the UK’s post-Brexit economic longevity on the global stage.

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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