By Tammy Evans, below, Partner, Ignition Law
Following on from the sense of celebration and ever-increasing positivity felt when International Women’s Day comes around, are we starting to see a shift in the balance and the breaking down of at least some of the hurdles faced by female founders?
We know that women are underrepresented in the entrepreneurial ecosystem. The reasons for this range from gender bias, the funding gap, lack of support and expectation through to plain old primary/family care responsibilities.
Access to funding is the biggest challenge. The Alison Rose Report commissioned by the Treasury and published in 2019 reported that female led businesses received less funding at every stage of their life cycle. Launching a business is hard enough but doing it with 53% less capital on average than men, speaks for itself.
The extent to which this access is denied because of gender bias or inequality is jarring; a survey conducted by Simply Business in 2022 found that 91% of female business owners felt that gender bias was prevalent in business. In all likelihood female entrepreneurs face stereotyping, discrimination and unconscious bias at every level – from investors, partners and customers.
The Alison Rose Report also found that Women were twice as likely as men to mention family responsibilities as a barrier to starting a business. This expectation and assumption placed on many women is deeply rooted and is indicative of a culture and society that needs to celebrate our future female entrepreneurs and leaders and light their way with aspirational thinking and mentoring.
And fundamentally, this is a problem worth solving; McKinsey & Co conducted research which showed that companies with greater gender diversity are 21% more likely to outperform others on profitability. So, how is this landscape changing?
Funding
The Rose Review Progress Report issued in 2023 had some really positive indicators:
- In 2022 women in the UK established over 150,000 new companies – more than double than in 2018.
- Of those, 17,500 were founded by those in the 16-25 age bracket – more than 22 times than in 2018.
- Female led businesses represented 20% of the businesses in the UK – up from 16% in 2018.
There are dedicated movements ensuring there is access to both early stage investment and ongoing support and a recognition of the need to break down these barriers. The Investing in Women Code had 190 signatories in 2023, including 30 bank (4 of the big 6 banks) and non-bank lenders. Signatories make a commitment to a culture of inclusion and to advancing access to capital for women entrepreneurs.
Specialised Venture Capital offerings focussing on women are becoming more common and there are 133 venture capital firms signed up to the Investing in Women Code. Alternative funding sources are also now much more prevalent and many females have successfully used different forms, such as crowdfunding and angel investors, as driven by initiatives such as the Women Backing Women campaign.
Evolution
How people work is also evolving with the 2020 pandemic rapidly accelerating alternative working models. This has undoubtedly benefited those who are having to balance the demands of running a business with a higher degree of responsibility in family life. This evolution hasn’t just benefited founders but women at every level. The new flexible working regulations will come into effect on 6 April 2024 and these give employees the right to ask for flexible working from day one of their employment and impose a requirement for a consultation process to discuss the request. These developments are undoubtedly going to help the primary care giver in any family, still predominantly women, and is demonstrative of the recognition that there is a massive underappreciated, untapped resource that has been crying out for advancement.
Mentorship and Networking
The arena of female networking and the female entrepreneurship ecosystem as a whole is also rapidly scaling. There are many female-based networks and communities who offer support, skill development, mentoring and resources. They also offer expansion; often the biggest barrier women face is their own level of expectation. The expansion of a woman’s concept of the art of the possible is the real key to progress. The Rose Review Progress Report also noted that it and its partners have provided more than 800,000 opportunities for direct support for female founders. This is a critical movement.
This progress is significant; in a few short years there have been some real inroads into advancing the opportunities open to female entrepreneurs. The work is not done but the signs are promising.
