With all major crises, comes opportunity. A chance to consider where we are and where we want to be.
Crisis is a catalyst for change. As the tech industry takes a central role in helping the global economy rebound, it must seize the moment and be inclusively bold. We need every talented entrepreneur contributing to a strong and lasting UK recovery.
The pandemic has revealed the fundamental role of technology in our society, with innovative entrepreneurs working to find solutions to our greatest challenges. But it has also highlighted the huge inequities across every aspect of society that we can no longer knowingly support or allow.
The global tech sector has remained resilient throughout the crisis. UK-based tech companies received record levels of venture capital investment in 2020, securing £10.7bn in an unprecedented year. We have also seen a strong start to 2021 with a number of highly anticipated tech listings and the London Stock Exchange announcing its best first quarter for IPOs since 2007.
But the huge majority of this investment remains directed to men.
Access to funding is a fundamental ingredient for a company’s success and our female-led businesses are missing out. London’s all-female led businesses received just £22m, less than 0.5 per cent, of the total £5.3bn VC invested into London’s tech firms in the first four months of this year, while 13 per cent went to mixed gender teams and 87 per cent to all-male founded companies. Extend Ventures’ latest report shows Black and Multi-Ethnic entrepreneurs are at an even greater disadvantage, with 0.02 per cent of total VC invested from 2009-2019 going to Black female founders.
The untapped potential of female founders equates to more than one million missing businesses and £250 billion for the UK economy. Think what could be possible if we harness this potential and invest in our female entrepreneurs at this pivotal time in the UK economy.
There is progress, with government committing to increase the number of female entrepreneurs by 50 per cent by 2030 and the UK tech industry working on a host of initiatives and commitments. Like the impressive female founder support programmes Alma Angels, WE-Innovate and AccelerateHER and the important work being done by organisations like Diversity in Tech, YSYS, Colorintech and UKBlackTech.
Yet female entrepreneurs largely remain a missed opportunity for investors and access to VC continues to evade minority founders. Even though women-led firms are shown to perform better over time, female entrepreneurs continue to face barriers accessing funding, particularly at the later stages of VC funding when financing rounds are larger and critical for sustained growth. Last year, 77 per cent of VC funding rounds into London-based all-female teams were at seed stage or earlier, while 19 per cent were Series A and only one round was Series B, or late stage funding.
To accelerate the UK’s economic recovery and fuel future growth, we need the brightest minds from all backgrounds contributing now. That is why we are partnering with London & Partners, London’s business growth agency, to launch Beyond Herizons, a 12-month programme designed specifically to target the funding gap in the UK investment ecosystem.
Beyond Herizons will support female founders who are actively seeking Series A funding to secure their next raise, helping them grow their business in the UK, US and beyond. It will help women tap into London’s extensive network of investors through a combination of entrepreneurial education, start-up business support and targeted networking opportunities.
In London, founders have access to more venture capital and more VC firms than anywhere else in Europe. Yet thousands of the UK’s most innovative and talented female founders struggle to find targeted support and financing for their companies.
Undoing the current investment bias female founders experience is not easy. Through transparent commitments from VC firms to create an industry free from bias, like the Diversity VC Standard, Investing in Women Code and Newton Venture Programme, combined with initiatives like Beyond Herizons, we can achieve measurable impact. This will ensure female entrepreneurs from all backgrounds can access the funding they need consistently.
As we emerge from this pandemic, the tech industry has a unique opportunity to drive an economic recovery that is inclusive, resilient, and sustainable, creating an economic future where no one is left behind.