A glaring gender gap in the UK’s high-growth entrepreneurship ecosystem is hindering progress and stifling the full potential of women in driving innovation and economic growth, a new report has revealed.
The report, from a taskforce spearheaded by Anne Boden, founder of Starling Bank, advocates for significant reevaluation of investment strategies with only six per cent of high-growth enterprises being wholly or majority led by women.
The Women-Led High-Growth Enterprise Taskforce, chaired by Boden since it was established in May 2022, has worked with entrepreneurs, campaigning organisations, and the investment community to gather data and identify the main barriers for women in starting and scaling high growth enterprises.
Funding
Central to its report’s findings is the stark revelation of persistent barriers obstructing women entrepreneurs from accessing essential funding. Despite strides made in recent years, the report highlights that only a fraction of equity investment in the UK is directed towards fully female-founded businesses.
Women continue to receive less than two per cent of venture capital funding annually, painting a concerning picture of gender disparities in the investment landscape.
To increase the amount of money going into female-founded businesses, the Taskforce recommends:
- Investment companies must publish the percentage of senior investment professionals they employ alongside targets, as female investment professionals are more likely to back female founded and led businesses.
- Investment companies sign up to the Investing in Women Code, where signatories are more likely back female led companies (35 per cent vs 27 per cent); although the number of signatories has grown by 40 per cent to 204 since 2022.
Diversity
Women-led businesses often encounter obstacles related to workforce diversity, leadership representation, and access to networks. The taskforce found that even after securing investment, women entrepreneurs face challenges in building diverse teams and accessing networks crucial for business growth and expansion.
Just 18 per cent of high-growth enterprises include one or more women on the founding team – while all-male founding teams make up 82 per cent of high-growth enterprises.
Improving diversity in senior investment roles is a key driver in enhancing the funding pipeline for women-led, high-growth businesses.
- Taskforce members agreed that gender balanced investors offer a broader spectrum of perspectives and experiences, enriching the decision-making process, reducing group-think.
Regional differences
Almost 45 per cent of England’s high growth enterprises are in London and considering that only 13 per cent of the UK population reside in London, this shows an imbalance in high-growth activities. The report stresses the importance of creating tailored support networks and resources for women entrepreneurs, particularly those outside traditional tech hubs like London.
To increase the number of women-led high-growth businesses outside London the Taskforce recommends:
- The establishment of Female Founders Growth Boards on a regional basis that will bring together public and private local stakeholders.
Boosting the economy
“As this report shows, the number of high-growth enterprises with at least one female founder is incredibly low and the picture is even worse for all-female teams,” says Maria Caulfield, Minister for Women. “This represents a shocking waste of talent and innovation and understanding the issues and barriers behind it was something I was particularly keen to understand.”
“We know women have the skills and ambition to launch successful businesses and we want to make sure they have every opportunity to do that. It is vital to everyone that we use this untapped potential to help boost the UK economy. I welcome the findings of the Taskforce’s work which will help us to achieve the government’s target of increasing the number of female entrepreneurs by half – equivalent to nearly 600,000
entrepreneurs – by 2030.”
Boden’s vision
In the report’s conclusion, Boden says: Our recommendations are ambitious, but I won’t apologise for that. Making small incremental changes won’t move the dial. We’ve been talking about this being a challenge for too long. Now we need to take big strides forward.
“Building upon the work of the Taskforce is in everyone’s interest, regardless of their gender. The timing is right, the opportunities are there, and so is the will to help female entrepreneurs succeed in growing some truly exceptional high-growth businesses. Like everyone who has worked on this report, I am excited to see what female entrepreneurs can achieve when these barriers are removed.”