New research published today by HSBC Private Banking reveals that half of female entrepreneurs in the UK experience gender bias when raising capital for their business.
The bias becomes apparent during the investment process, when female entrepreneurs are asked questions about their family circumstances (44%), their credibility as business leaders and loss prevention (41%). The research found large differences across markets with female entrepreneurs in the UK experiencing the highest levels of gender bias, followed by the USA at 46%.
Last year, the Federation of Small Businesses found that women-owned and led businesses contribute £221 billion to the UK economy. However, women are still being held back when it comes to raising capital. HSBC’s new research found that 70% of UK female entrepreneurs said they found raising capital the most challenging part of the process. 42% said that the main challenge during the pitch process itself was satisfying investor requirements and preparing the business plan, followed by answering questions about the business plan (32%).
On top of these challenges, the findings show that over half (53%) of female founders are actually denied funding, and those that secure it, receive 6% less than their male counterparts. This gender imbalance is also reflected in the make up of pitch panels. Although the UK has the most all-women investor panels (13%), it also has the lowest percentage of mixed panels (47%) across all markets.
Despite the pressures of raising capital, the UK’s female founders are determined to succeed. This research shows that they are the second most confident entrepreneurs globally (70%), behind mainland China (80).
HSBC Private Banking commissioned the ‘She’s the Business’ report to explore the challenges facing female entrepreneurs when seeking investment. The research, conducted amongst more than 1,200 entrepreneurs in Europe, Asia, the Middle East and the US, will help inform HSBC Private Banking’s ongoing work to overcome the barriers facing female entrepreneurs during the investment process.
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Kirsty Moore, Managing Director at HSBC UK Private Banking in the UK, said: “It is concerning that half of female entrepreneurs in this country have experienced bias when trying to raise capital for their businesses. HSBC Private Banking has been working with entrepreneurs in the UK for decades, but this research shows how far we have to go to level the playing field for women to fulfil their ambitions. We know that networking groups are valued by female entrepreneurs, and that’s why we are proud supporters of AllBright and a founding member of the WealthiHer Network, to help women support one another.”
Victoria Peppiatt, UK entrepreneur and co-founder of Phrasee, said: “This report shows the barriers female entrepreneurs face when trying to grow businesses. It’s important that institutions with the capacity to bring about change, like HSBC, continue to highlight these issues and draw attention to the ways in which gender bias can be overcome. Mixed panels, more access to networking opportunities and a commitment from investors to review their investment choices are just some of the ways we can achieve more parity.”