Written by Sophia Matveeva, CEO and founder of Enty
As a female founder and the CEO of Enty – a platform where women discuss clothes and beauty with professional stylists and a community – I was very encouraged to see the launch of the Alison Rose Review into Female Entrepreneurship last week.
The Review was commissioned by the Treasury to uncover ‘unfair obstacles’ facing female founders and via the introduction of new measures, stimulate the economy by improving female start-up and scale-up rates. The Review has prompted a new government target of encouraging 600,000 new female entrepreneurs by 2030 which they hope will contribute £250bn of new value to the UK economy.
So far, so good, but do the measures go far enough to address some of the day-to-day challenges facing female founders?
Statistically, women make up a third of UK entrepreneurs but receive a meagre share of the available funding. A recent report commissioned by the Chancellor and undertaken by the British Business Bank in partnership with Diversity VC and the BVCA revealed that for every £1 of VC investment in the UK, all-female founder teams get less than 1p, all-male founder teams get 89p, and mixed-gender teams 10p.
The Rose Review identified five key barriers that contributed to lower rates of entrepreneurship in women including low access and awareness of capital; greater risk awareness; perceived missing skills & experience; disproportionate primary care responsibilities and a lack of relatable mentors and role models.
These barriers certainly exist but I would argue that there are other factors at play that are not being fully addressed. In my experience, there are two different sets of problems women can face as entrepreneurs – those around funding for female-centric products and those just associated with the fact of your gender.
It is often said that the best entrepreneurial ideas come from a need that the founder has that is not being answered by the market. And because female founders are more likely to create companies to solve their needs and the vast majority of investors are male, the gap in funding is a direct reflection of the gap in understanding of the market for female-centric products and services.
Enty, the platform we created, is a case in point – the protected, ‘troll-free’ aspect of the service and community is central to the proposition but it is aspect that is not always fully understood by male investors. Women often have a very different experience online to men – they are much more likely to be bullied or receive unwanted attention.
Enty would never have worked unless we put user safety first and reassured users that they would not be bullied or harassed. But of course, it’s far harder to understand this pressure point, if you have not personally experienced it. As a result, and without intending to, Enty became a female-funded company, because women investors could intuitively understand the need for feedback and reassurance about their outfit choices and could see our global potential.
The other cluster of challenges facing female founders arise from the pure fact of their gender. There is plenty of research into unconsciousbias thatt reveals that men are most often judged for their potential whereas women are evaluated on what they have already delivered. Start-up investing is, of course, all about potential. So this is a fundamental challenge. This coupled with the fact that the market and interactions between entrepreneurs and investors are totally opaque, makes the start-up world more challenging for females.
There are no official reporting structures, so a female founder pitching to a male investor can easily be caught in a classic ‘abuse of power’ narrative when a would-be investor uses his power to harass. No one ever finds out, so this dynamic continues to exist unchecked.
Of all the initiatives proposed in The Alison Rose Review, I am most encouraged by the new Investing in Female Entrepreneurs Code which will measure progress by encouraging banks and other financial institutions to publish the gender split of the investments they make on an annual basis.
There will also be more focus on creating new banking products aimed at entrepreneurs with family care responsibilities, alongside public and private sector collaboration to offer greater access to guidance on best practise, networking and mentorship opportunities. But it’s the measurement factor that is key, and will help to shine a spotlight on the shocking gender funding gap, as it has with gender pay gap reporting.
The reality is, you get what you measure, and one thing we can all agree on, is those female entrepreneurs receiving just one penny of every investment pound is nowhere near enough, and represents a huge untapped opportunity.