Growth is the watch word of the day. As the UK works hard to build economic momentum and secure a foothold in the industries of tomorrow, investors like me are scouting out the companies and ideas that will play a vital role in bringing these ambitions to fruition. But to ensure the British economy is truly firing on all cylinders, we can’t afford to overlook key cohorts of entrepreneurial talent. And one which is all too routinely overlooked is women.
We’ve known for a long time that backing more women could be the growth catalyst that Britain needs. Yet despite years of talk about doing more to support women in entrepreneurship, progress has stalled. New data published today by the Startup Coalition lays bare just how bad the picture is: for every all-female-founded company securing £1m or more in funding, 12 all-male-founded companies achieve the same. What growth-driving innovations are we missing out on because women simply aren’t funded at the same levels?
There’s no lack of female talent — much of this imbalance is structural, with factors such as the ongoing gender realities of VC preserving this status quo. Despite progress in recent years, just 23% of senior roles in VCs are held by women. According to Ada Ventures’s Women in VC report, just 23 women have a significant ownership stake in a VC firm in the UK that was raised in the last seven years. The data also shows that the women who do raise institutional capital face more hurdles in the process and end up raising smaller cheques. Likewise, male founders can be perceived more favourably by VCs looking to replicate former successes through “pattern-matching”, which compounds the funding gap cycle.
We are also held back by a research gap which primarily focuses on binary gender data only and rarely looks at the intersections of gender and race, LGBTQ status, socioeconomic background, age or any other aspect of diversity.
Change is more than possible. But to achieve it we need more people in power and roles of influence to step up to the plate and drive forward positive action. We are seeing flurries of this in some quarters. The government has taken some positive steps. This includes launching the Investing in Women Code, the women-led high growth taskforce — which I sat on alongside Anne Boden, founder of Starling Bank. We’ve also recently seen the launch of the Invest in Women Taskforce, thanks to strong advocacy by Debbie Woskow and Hannah Bernard and support from the British Business Bank and M&G, amongst others. And there are consistent examples of grassroots efforts from groups such as Sie Ventures, Alma Angels, HERmesa and Female Founders Forum. But as today’s report from the Startup Coalition shows, there is more the government could do to improve the situation.
Firstly, political decision makers could mandate better data collection on exactly where funding is going. This could include new fields on Companies House which allow the demographic composition of founding teams to be monitored more easily. Better data collection is something the Diversity VC Data Alliance is already banging the drum for and an area where other regions — such as California via its Venture Capital Diversity Reporting Law — are already blazing a trail. A consistent and comprehensive UK-wide approach to diversity data collection would provide a transparent view of where capital is flowing and where it is not, allowing firms and policymakers to course-correct where blindspots exist. Positioning the UK as a leader in this area — especially as the US takes a step in the opposite direction — could act as a global beacon for overlooked founders, attracting international talent to the market.
Secondly, we need to make it easier for women to become angel investors. Increasing awareness and ease of access to schemes like EIS and SEIS — which incentivise investment in early-stage companies — is a vital step to improve gender diversity for angel investors. UK tax agency HMRC’s own impact assessment anticipated that SEIS investors “will tend to be male, located in the south of England and have higher overall income levels”. The government could explore proactively informing individuals who meet the criteria to qualify as high-net-worth angel investors. HMRC could send tailored notifications to these individuals, outlining their eligibility and providing clear, practical steps for becoming an angel investor.
Finally, I would love to see more safeguards in place to prevent abuse of power and discrimination in the fundraising process. The Startup Coalition’s report proposes that the British Business Bank creates a dedicated whistleblowing mechanism specifically for reporting discrimination. This would provide clearer data on the prevalence of discrimination and enable more targeted interventions. All stakeholders would benefit from this system by increasing transparency, protecting founders from discriminatory practices and helping the British Business Bank and other development banks ensure that government funding is not going to funds that discriminate.
The challenges are significant, but the solutions are within reach. By implementing these policy changes and fostering a cultural shift towards greater inclusivity, the UK can unlock the immense potential of female founders and wider cohorts of overlooked talent, fuelling the nation’s engine of growth in the process.
