Finance · 22 March 2017

Lack of investment opportunities sees female startup founders lose out

Investment opportunities
Investment opportunities for female startup founders were low compared to backing for male-led enterprises

Female entrepreneurs could be at a disadvantage when looking to scale up their company, according to new research that suggested a gender gap in investment opportunities in Britain.

According to the Untapped Unicorns study, by lobby group The Entrepreneurs Network, in 2016 male-led enterprises received 86 per cent of all venture capital (VC) startup investment, and 56 per cent of all backing from angel investors.

Crowdfunding platforms were also found to favour male-led startups over female entrepreneurs. In 2015, just eight per cent of fundraisers were women.

Finance remained the greatest business concern for female entrepreneurs, and a majority claimed that a lack of available mentors prevented them from accessing the right support to help grow their company.

Despite the disparity in investment opportunities, female entrepreneurs could offer better value to their organisation. The research suggested that female entrepreneurs bring in 20 per cent more revenue with half the investment of male-run startups.

Annabel Denham, a director at The Entrepreneurs Network, said the findings revealed a “frustrating reality” for female startup founders.

“This is not just an economic discussion, though we know scale ups are vital to the UK economy – we want to see smart, savvy businesswomen getting the same opportunities as their male counterparts,” she said in a statement.

The report outlined a number of recommendations to tackle the lack of investment opportunities for female-run enterprises. It urged the Department of Business, Energy and Industrial Strategy to publish growth data on UK startups, and encouraged government to work with the UK Business Angels Association to demonstrate the potential of female-founded companies.

Female entrepreneurs were also encouraged to invest in and provide mentoring for fellow founders, and challenged the media to cover more women-led enterprises and report on the success stories.

Finally, the report confronted the lack of gender diversity in the VC industry and pushed investment firms to acknowledge the poor male:female employee ratio.

Speaking at the launch of the report, Debbie Wosskow, a member of the Female Founders Forum and co-founder of AllBright, said: “Female Founders are underfunded and yet deliver great returns for investors.”

Find out what advice the CEO of Crowdcube had for startup founders seeking investment for the first time

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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