Good news and bad for female entrepreneurship in the UK. On the plus side, new research reveals growing numbers of women founding high-growth companies; more disappointingly, women appear still to be struggling to persuade investors to back their businesses – and progress towards putting this right is slow.
The research, published by the high-growth market research specialist Beauhurst, reveals that 25% of the UK’s high-growth companies count at least one female founder amongst their leadership; 11% of high-growth companies were founded by an all-female team.
In some regions of the country, moreover, female representation is even higher – 33% of Scottish high-growth businesses were founded by at least one woman. In Northern Ireland, the figure stands at 32%.
Less happily, however, Beauhurst reveals that women-founded businesses have snared just 9% of the funding raised by high-growth companies during 2019 – and all-female teams have picked up just 1.5%. Those numbers are actually in decline, with female-founded businesses having enjoyed a 15% share of funding in 2015.
Deal data tells a similar story. The proportion of equity deals secured by teams with a female founder increased from 14% in 2011 to a high of 22% 2017, Beauhurst’s data reveals. Since then, this trend has faltered, with female-founded businesses accounting for only 21% of deals in 2019 so far.
Henry Whorwood, head of research at Beauhurst, says that while there is some encouraging data in the study, there is clearly still plenty of work to do. “Gender bias may be less palpable than in times gone by – and some of the female founders we’ve spoken to have never felt they have been treated differently to their male counterparts — but our data shows there is a systemic bias in the UK’s high-growth economy.”
Beauhurst’s data on how female-founded companies are growing may provide some insights into what is necessary to address this bias. It suggests that investors funding businesses on crowdfunding platforms are more likely to back women-led businesses and that such companies are particularly likely to have advanced by working through an accelerator programme. Universities boast significant numbers of spin-out businesses founded by women.
By contrast, the venture capital and private equity sectors are less likely to fund women-founded businesses. Only 16% of high-growth companies taking on investment from these professional investors have at least one female founder – on crowdfunding platforms, the figure rises to 24%.
Does this reflect the profile of the venture capital sector? Research published earlier this year by the British Business Bank revealed that just 13% of senior members of venture capital investment teams are women; around half of investment teams do not include a single woman. Other research has found that women founders are far more likely to be asked about issues such as childcare by investment panels when pitching for funding.
Beauhurst’s Henry Whorwood points to research from Innovate UK and The Entrepreneurs Network that concludes promoting strong female role models can be a valuable way to encourage the next generation of female entrepreneurs. No doubt this is true, but venture capital investors also have to recognise the potential they are currently missing out on because of their own lack of gender diversity.