MIND THE GAP
LAST YEAR, just 9% of the investment that poured into British start-ups supported companies with a female founder, according to data from Barclays and the Entrepreneurs Network, reported this March in its Untapped Unicorns project.
And, globally, that number is decreasing.
The figures throw a spotlight on a corporate culture less likely to support female-led companies. Male entrepreneurs were 86% more likely than their female counterparts to raise venture capital funding in the UK in 2016; they were also 56% more likely to attract angel investment.
In spite of the findings, the data, tracked by Beauhurst, shows that businesses run by women perform remarkably strongly in comparison with male-led companies. Women entrepreneurs bring in 20% more revenue, with half the money invested and just 23% of female founders have seen a business go under (compared with 34% of men).
The figures highlight the lack of women involved in the investment sector – and its knock-on effect on the economy.
TechCrunch’s 2016 study of the top 100 venture firms globally revealed that just 7% of partners are women. That percentage is reflected in the measly 10% of funding going to female-led businesses between 2010 and 2015.
So, what are women doing to change things?
AllBright, the first funding and support platform of its kind in the UK for female entrepreneurs, was launched at the tail end of 2016 by Anna Jones, CEO of Hearst Magazines UK and Love Home Swap founder Debbie Wosskow. It follows in the footsteps of US funds and platforms including Female Founders Fund, Plum Alley, iFundWomen and BBG Ventures.
She felt compelled to act on figures showing little more than 2% of venture capital funds going to female founders in 2016.
Wosskow says she felt compelled to act on figures showing little more than 2% of venture capital funds going to female founders in 2016.
“As an investor and founder, I knew from my own experiences why we were seeing stats such as these, but we wanted a clearer picture. To help us, we conducted our own survey this month, which polled over 500 female founders and aspiring female founders,” she says.
“We found that 75% of them need funding now to launch or grow their businesses.
When we dug deeper, 40% of those say they don’t even know where or how to start the processes of seeking funding, and 25% say they don’t know how to write proposals or complete the right paperwork – we need to demystify the process and make it more accessible to women.”
Demystification of the corporate world sits at the heart of initiatives aimed at new business founders. The Entrepreneurs Network research says 83% of women who have started a business know someone else who has done too.
Do we need more female role models?
The impact of a good mentor is crucial, says Lisa Pogson, a director at heating and air conditioning specialist Airmaster, who has spent her career in the construction industry. “I’ve had fantastic role models throughout my career – both male and female,” she says.
“But the very busy people are the ones that have the power to change how you think. Sharing experience, no matter what your industry, is invaluable. In fact, people in different industries often give a different perspective. It’s always easier to tell someone than do it yourself,” she smiles.
“It’s always hard to walk up to someone you admire and talk to them, but you have to put yourself in that room. I really admired Julie Kenny (founder of the £25m security equipment manufacturer Pyronix), but I always thought she’d be too busy to help me.
"I forced myself to introduce myself, and she gave me ten minutes; then half an hour the next time I met her. In what was the busiest year of her career, she gave me an hour that completely changed my business.
"That’s why networks like the Chamber, and other business support groups work. But you have to be bold and put yourself in that situation, and women are often unconfident in making that move.”
In the UK, the Women’s Business Council reckons the untapped potential of women running businesses means the economy is missing out on more than 1.2m new enterprises.
Why does it matter?
The Federation of Small Businesses cites statistics showing that, in 2014, 20% of single-person businesses and 18% of small employers in the UK were majority-led by women.
And – while a flick through the business pages tends to concentrate on the large-scale investment targets – start-ups and small businesses are significant because local economies, and communities, see their tangible benefits in the form of new jobs, innovation and economic growth.
Following its Women in Enterprise: the untapped potential report, the FSB announced it was collaborating with Facebook on the launch of its She means business campaign. Releasing research by Development Economics and YouGov, the social media site revealed that around 2.7m women want to start a business in the UK. The impact of converting those dreams is staggering: they have the potential to create 340,000 new businesses, support 425,000 additional jobs and boost the UK economy to the tune of £10.1bn.
“The UK has come a long way when it comes to female entrepreneurship, but we still have a way to go,” admits Wosskow.
“When we look to the USA, a woman is twice as likely to start a business as a woman in the UK. In our survey, nearly one in two of the respondents said they couldn’t take the risk – whether that was financial, or because they had existing personal or family commitments. Another 20% also said they don’t know anyone who had done it before or where to start.
"AllBright addressing challenges such as these are what will deliver our mission – it’s much more beyond capital.”
And what’s the pay-off?
Once those businesses are up and running – in spite of their success – the low numbers of women involved in investment are proving a block, Wosskow says.
“If only 18% of employees directly involved in investing are women (according to Diversity VC), this has an impact on women pitching to them. As someone who has only more often than not pitched to a room of men, not seeing diversity across the table is intimidating and alienating.
“Confidence is a big issue for founders. I know first hand as an investor that women don’t ask for what they need – they are usually more conservative in what they ask for and only share returns they truly believe they can deliver. That’s not the same for men – who definitely over sell and over promise, but it works! People come through this door every day asking me for money. Men will say, ‘It’s here now – but in three years it will be a billion-dollar business’. Women are less mad in how they tell the story.”
Alongside her role at Airmaster, Pogson chairs Barnsley and Rotherham Chamber, which has become an affiliate of the US-based Athena International programme. “We’ve looked at the qualities that women bring to the business environment a lot,” she says. “We’re really behind the idea of the 30% Club, where 30% of your board, or positions of influence, are held by women. We’ve found the conversations become much more diverse; the perspectives are different.”
The Entrepreneurs Network statistics back up Pogson’s approach – since 2011, investments in companies with no female directors on their boards averaged £2.9m.
Adding a single female board member corresponded with an increase of £500,000.
“There is less of a gung-ho approach, but also less caution,” reveals Pogson. “The discussion becomes more balanced, and we’ve seen, first-hand, the benefits of that financially.”
Photography: Benjamin Child, Mike Wilson