Last year Forbes reported that only 2% of all VC funding in the US went to companies started solely by women, and a recent report by the British Business Bank, commissioned by the Chancellor Philip Hammond, suggests that the picture is very similar in the UK. In fact, the latter reports that for every £1 of VC investment in the UK, all-female founder teams receive less than 1p, whereas all-male founder teams get 89p, and mixed gender teams the remaining 10p. Of greater concern is the fact that 83% of deals that all UK VCs made in 2018 had no women at all on the founding teams.
And here comes the double whammy – it’s not just a case of funds failing to find their way to female entrepreneurs but there is also a low number of female funders ready to invest. In fact, only 14 per cent of business angel investors in the UK are women. In other words, women are hugely underrepresented on both sides of the corporate finance fence – and when it comes to big business and female board representation, the statistics are even more sorrowful.
Yet research suggests that if only we could address this issue, then the UK economy would soar. If we removed the barriers to female entrepreneurship, and reversed the stereotypes which hold women back when trying to win funding for startups, forecasts state the UK economy would see a £100 billion boost over the next ten years just from the women currently waiting in the wings to start their own businesses – plus statistics show that UK’s most diverse workplaces — across not just gender ethnicity and sexual orientation — were 12 percentage points more likely to financially outperform their industry average than the least diverse firms.
So how do we redress the gender balance? Well, change needs to come from both sides. We need to empower women with the belief that they “can” raise the funds they need to start and grow their business idea, whilst also simultaneously ensuring that VCs employ sufficient females in fund management roles so as to foster a warm environment in which female founders feel empowered to pitch. As angel investor Jenny Tooth explains about investment panels: “Women ask more empathetic questions whereas men tend to get very fixated on the numbers. When you’re meeting a company and it’s very young, the main thing you have to go on is the person behind It – it’s this ability to empathise which women can do so well.”
Read the full British Bank report on Female Founders here.