Just 1p in every £1 of venture funding goes to female led start-ups – how do we change the business environment for women?

Recently it was revealed that just 1p in every £1 of venture funding goes to female led start-ups. The research conducted by the British Business Bank on behalf of the Treasury found 89% of start-up capital was invested in companies with all-male founders.

While a disappointing statistic at least now we are talking about the challenges faced by female entrepreneurs, including the lack of available support networks and mentorship programmes.

Research from management consultants McKinsey suggests as much as $12 trillion, or 11%, of global GDP could be added to the world economy by 2025, simply by having more women in senior management positions.

So there is a real opportunity to be grasped. But what do we need to do?

Network, network, network

Networking is often crucial to the success of any business. It helps build connections that can help make an idea for an enterprise a reality. It can also help budding female entrepreneurs draw on the experiences of others, make connections that increase their chances of finding the funding they need, or once their business is up and running introduce them to new businesses.

There are now also more networking events specifically for female entrepreneurs including finnCap’s own Female Leaders Series.

Provide women with mentors

Speaking to other successful women and working with someone that can act as a mentor is an important tool for passing experience down through the generations, for both men and women.

There remain very few female CEOs of top FTSE companies and the visibility of successful women remains a real issue. Research has revealed a third of men said they had a mentor now or in the past, compared with 28% of women. Men also report having had more mentors than women (3.7 on average, compared with 2.5).

While women are getting better at creating their own networks and mentoring programmes it’s clear more needs to be done.

Don’t let doubt hold you back

Research shows that in order to succeed women, as opposed to men, have to exhibit pro-social behaviour. This is defined as behaviour that suggests an intent to benefit others, as helping, sharing, donating, co-operating, and volunteering.

It can also be defined as obeying the rules and conforming to socially accepted behaviours.

In other words, women often find they have to exhibit what might be described as female attributes in the workplace.

Also women appear to doubt themselves more than men and can be put off, for example, from raising funding, because the world of finance appears forbidding, male dominated and jargon-led.

More effort could be made to demystify finance, particularly with regards to the sources of start-up and then scale up funding. An understanding of the financial options available would undoubtedly help many female entrepreneurs scale and grow their business.

Education matters

Education plays a role. Women account for just 14.4 per cent of the workforce in STEM (Science, Technology, Engineering, and Mathematics) occupations. Too few girls are encouraged to study STEM subjects at school with this year’s A-level data showing that less than 10% of computing students were girls.

The environment for female entrepreneurs in the UK is improving though. Recent research published by the Federation of Small Business, estimates there has been a 40% increase in UK economic contribution and a 26% increase in employment generated by female-led businesses since 2012.

Meanwhile, a quarter of private sector employment (23.85%) is now calculated to be generated by female- owned and female-led businesses. There are Venture Capitalist Funds focused solely on female-led businesses such as Merian Ventures or Aspect Ventures.

There are other VC firms with women in prominent roles such as Passion Capital, Local Globe, Accel and 83 North that may be more inclined to give a female-led business a greater hearing.

As more women enter the venture capital space and with ever greater numbers of women passing on their experiences through mentoring and working together, women considering becoming entrepreneurs will hopefully be emboldened to take the risk and launch their businesses with confidence.

And they should do so. A recent study of over 350 US start-ups founded by women revealed they delivery higher revenue—more than twice as much per dollar invested—than those founded by men, making female-owned companies better investments for financial backers.

The research calculated venture capital firms could have made an additional $85m over five years if they had just invested equally in both the female and male led start-ups. So what’s stopping you?



Mind the mentoring gap: Why men are more likely to seek out career mentors