Closing the gender investment gap: access to funding for female founders
Professional barriers
The issue
One of the most significant challenges faced by female entrepreneurs is accessing business funding. Our survey found that 25% of respondents believe female business owners face higher barriers and more complex requirements when seeking investment compared to male entrepreneurs. This is further exacerbated by the perceived higher risks associated with investing in female-led businesses, cited by 20% of those surveyed. The Government’s Women-led High-Growth Enterprise Taskforce Report reinforces these findings, highlighting that access to the right debt or equity finance is a key challenge for female-founded scale-ups. Currently, for every £1 of equity investment in the UK, only 2p goes to fully female-founded businesses12.
The funding gap must be addressed to create a more level playing field for female-led businesses. Without adequate capital, female entrepreneurs may struggle to invest in essential resources, expand their operations, or weather unforeseen challenges. This can lead to slower growth, reduced competitiveness, and hinder their ability to scale their businesses effectively.
of respondents believe female business owners face higher barriers and more complex requirements when seeking investment compared to male entrepreneurs.
The Investing in Women Code, founded by the British Business Bank, plays a crucial role in improving funding opportunities for female entrepreneurs. The Code's annual report highlights the challenges and progress made in financing women-led businesses. For example, the 2023 report revealed persistent disparities, but also showed that female angel investors led to higher investment in all-female teams As of 2022, 190 financial institutions had signed the Code, committing to improving female entrepreneurs' success.
The Code's signatories have shown promising results. For instance, 35% of VC deals backed by these signatories included at least one female founder, compared to 27% in the wider market. Additionally, deals for all-female teams rose from 6% to 9%13. These findings underscore the positive impact that the Investing in Women Code is having on increasing investment in female-led businesses and improving gender diversity in the VC space.
What our panel said
“The gender of the business leader should be irrelevant. If your business is successful and you've got the right numbers – if you're selling the dream to potential investors – if you've got a really strong team of people running your organisation, and your reputation in the market is great, then there's no reason why a valuation should be any lower [than for businesses founded and led by men].”
- Heidi Carslaw
“When I chose to pursue private funding, it was clear that men often secured money faster than I did. This was largely due to the networking environments and social activities, like going to the pub or playing golf, which men typically engage in and women may not find as comfortable or accessible. I had to put in extra effort to seek out men who were genuinely supportive of women and recognised the value of women-led businesses. As a result, men tend to have a broader pool of potential investors than women do.”
- Rebecca Rosmini
“The issue is structural and generational. As venture capital and private equity decision-makers achieve gender parity and more female entrepreneurs build successful, high-return businesses, the landscape is shifting. However, without deliberate efforts to promote these changes, underinvestment in female-led ventures will persist. Many founders we work with have strong accountancy or finance skills which assists them to attract investment.”
- Melanie Stancliffe
Action needed
To create a level playing field for the future, businesses and their leaders can encourage venture capital firms and other financing providers to increase transparency in their decision-making processes. Collaborative thinking between funders would also assist, with 32% of respondents citing easier access to information on funding options as a measure which would support female-led businesses to grow.
Initiatives such as more accelerator programmes and government incentives for venture capital and private equity funding, cited by 19% and 14% respectively by respondents, can also play a crucial role in supporting female-led businesses. This could include grants, loans, and investment funds targeted towards women-owned businesses.
By establishing dedicated government initiatives, including encouraging more women into the investment space, and greater awareness of funding options, more funding can be directed towards female entrepreneurs, helping to address the disparities in investment and empower female leaders.
12 Women-led high-growth enterprise taskforce report, UK Government, p1
13 Investing in Women Code Annual Report 2023, British Business Bank, p4