Of the six million businesses currently active in the UK, only 20% are run by female founders. And this is high compared to many other advanced nations. The Rose Review of Female Entrepreneurship (HM Treasury 2019) reported it was just 15% of women in Canada, 11% in the US, and 9% in both Australia and the Netherlands.
In the UK alone, an additional £250 billion of new value could be added to the economy if women started and scaled businesses at the same rate as men. That would be an amazing boost to national income and wealth. Globally, BCG estimates closing the gender gap could boost global GDP by up to $5 trillion.
It is clear that the number of women starting and scaling businesses remains much lower than men. Why is that?
It’s certainly not from the lack of ideas. However, it’s all too common for a female CEO to not see herself as an entrepreneur. The Rose Review of Female Entrepreneurship found women are less likely to believe they possess the entrepreneurial skills required. Andrea Dunlop, EWPN Advisory Board Member, also cited firsthand examples of women who when called entrepreneurs, told her they didn’t see themselves as that and didn’t feel qualified to be one. And yet, by any measure they all truly were.
There may be many other reasons, but it’s clear that one key barrier is access to capital. In fact, female-led businesses access less funding at every stage of the funding journey. For the few who manage to secure it, almost three quarters receive it from friends and family. Two thirds of women surveyed also experienced some kind of negative stereotyping around female entrepreneurs, including almost half had at some point been told they needed a man to help them with their business.
Even women founder events and women-led groups, while good for networking, are striking for their complete lack of investor attendance and interest. Harvard Business Review reported bias in the VC pitch process – men were asked more ‘promotion’ questions (i.e. upside and potential gains), while women were asked more ‘preventive’ questions (i.e. potential losses and risk mitigation). Entrepreneurs who addressed promotion questions raised at least six times more money than those asked the prevention questions.
Entrepreneurs Network reported just 9% of funding goes to women-led startups in the UK. Women tend to start businesses with much less available capital than male entrepreneurs and achieve far lower levels of equity investment, with male entrepreneurs 86% more likely to be venture-capital funded, and 56% more likely to secure angel investment.
However, when women do secure investment, their businesses return 20% higher revenue despite 50% less investment. The economics of female-led businesses alone prove the untapped potential, and initiatives such as InvestFem plan to increase opportunities for female entrepreneurs.
So, let’s help women see an entrepreneur when they look in the mirror and remove the barriers women face to funding. Not only will we unleash the hidden half of our country, we’ll also double the potential of the UK economy.
Additional source & graph credit: Crunchbase (Q2 2019 Diversity Report: Underwhelming Funding For Female Founders, We Ask VCs Why)
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