All investors are judged on the quality of their decision-making. Where we get it right, companies thrive; where we make mistakes, the consequences are obvious. Success and failure are both easy to measure – we can be frank about what works and what doesn’t.
When it comes to venture capital’s record for investing in women, the data is clear: in the UK, and worldwide, female founders don’t get their fair share. The amount of funding going into businesses created by women is dwarfed by investment in companies led by men. We must change this equation.
Where women get less funding it’s not for a want of new ideas. Foodsteps, a start-up that helps companies to calculate, label and then cut their impact on the environment, is a great case in point. Just a few years ago its founder Anya Doherty was still studying at university. Today, she is working with brands like Pizza Express and Wagamama and has just raised $4.1m in seed funding in a round led by Octopus.
She is not alone. Twenty-three per cent of the businesses that we have backed since 2016 have been led by female founders. Currently, 17 per cent of businesses in the UK are women-led so this compares favourably, but it doesn’t mean that we have solved this problem. One industry estimate suggests that under 5 per cent of total VC investment goes to all-female teams and other estimates are even lower. We need to do better. The good news is, we know that a different approach is possible and yields results. This is a problem we can fix.
Today, I’m joining the board of the Rose Review – an initiative led by NatWest’s chief executive Alison Rose and the Department for Business, Energy and Industrial Strategy, to boost female entrepreneurialism in the UK. My job on the board will be to focus on venture capital, complementing existing initiatives and working alongside colleagues across my industry to understand the barriers to change and deliver solutions.
I start with an open mind. I want to hear from industry colleagues who are already addressing this problem and to learn from them. But I have a few ideas from my own experience.
Diverse teams matter. The Foodsteps seed round was led by my colleague Lucy Clarke, but some founders are surprised to find themselves making a case to female investors. Entrepreneurs tell us that they have only ever pitched to all-male rooms before. We need more women making investment decisions.
We also need more female applicants. When women get an initial investment, they are as likely as men to secure future rounds of funding. But we don’t see enough women seeking early-stage funding. We need to offer them answers to the crucial early question: “Where on earth do I start looking for investment?”
Collectively, we can do more to celebrate the successes of female-led firms and show that securing a venture capital investment is an achievable goal. Founders like Anya Doherty are doing remarkable work. Telling their stories can help founders find the confidence to follow their lead.
We shouldn’t pretend there are easy answers. We won’t, for example, fix this problem simply by recruiting more female investors. My first role models in this industry were men and change won’t be possible without the advocacy of male leaders. There are no shortcuts either; making strong investments takes time.
Crucially though, we do have the tools to solve this problem. Where money is going matters and leaders in venture capital decide where to invest. There are lots of good, creative conversations and some striking initiatives already underway across the industry. But we need to get results and make every initiative count. By doing so and by sharing our understanding of what drives greater investment in women, venture capital can make a difference for the next generation of female entrepreneurs.