Every day there is a deluge of positive commentary about the state of female entrepreneurship in the UK, and across the world. It’s no surprise, therefore, that some might argue continuing to highlight the differences between men and women in the world of business is ‘behind the times’, fuelling the divide and perpetuating a myth.
So, the question is, is it still important that we differentiate gender in business?
Whether it’s breaking the glass ceiling, equal representation in the boardroom, closing the gender pay gap, FlexAppeal or the record-breaking rise of women starting their business during pandemic, there has been an undeniable and much needed (but sometimes all-too-slow) shift to ensure better equality and representation for women in business.
But few can say we’re even close to ‘there’ in the world of VC. Shockingly, even in 2022, women founders still only account for 3% of all capital investment globally. In the UK this number is even smaller – for every £1 of venture capital investment in the UK, all-female founder teams get less than 1p, all-male founder teams get 89p, and mixed-gender teams 10p. The figures worsen still for Black founders - between 2009 and 2019 only 0.24% of all VC funding in the UK went to 38 Black founders; only 1 was a woman.
But the data shows that the VC market is overlooking a significant economic opportunity:
We need to be honest with ourselves about the bias which works against the women founder community. In a recent article for Sifted.Eu, Tessa Clarke spoke about the launch of a new mentoring programme:
With the odds so staunchly stacked against us, we absolutely do need all the support we can get to help us figure out how to play the game and win. I’m not convinced that the “200 Billion Club” will have any meaningful impact in shifting the meagre amount of investment going to female founders. Why? Because the focus of the 12-week programme is on “getting participants pitch-perfect and VC investable.
This clearly implies that the root cause of the problem lies with female founders not being up to scratch, rather than the VC industry being structurally biased.
So, given that time and again women founded businesses have proven themselves to not only be successful, but prepared and highly investible, what can be done to help more of them overcome unfounded bias and get funded?
Every founder needs to have access to information about the ‘what’s, how’s and why’s’ of equity fundraising. But we need to see more focus on those materials specifically geared to women founded business.
This doesn’t mean writing it in pink ink – it means including case studies from other women founded businesses, having better visual representation, and providing tailored guidance that helps them overcome the specific challenges they face getting funding.
Some organisations are starting to do a better job of specifically making sure women have the access they need, but more can be done.
The UKBAA is a founding signatory of the Investing in Women Code – a brilliant way forward to outline the musts for the future of women founders . They share a lot of resources, guidance and support for women looking for investment, and for organisations looking to ensure a more diverse Angel investment offer.
A strong support network is crucial to all founders. Every business starter needs mentors, peers, contacts and introductions to be successful, and the lack of some or all of these is limiting for women entrepreneurs and their growth.
We need to welcome women founders that have been through the equity fundraising process to the stage to share their experiences so other women founders can be inspired and motivated by their stories.
Loud voices of people like retail royalty Holly Tucker (founder of NotOnTheHighStreet), make-up magnate Charlotte Tilbury, and the world’s youngest billionaire, and founder of dating app Bumble, Whitney Wolfe Herd, are already doing this - inspiring a new generation of women founded businesses.
Currently, the proportion of women investors in angel groups remains at only 16-18%.
we are radikl's ground-breaking Halo programme seeks to find nascent angel investors from within the U.K.'s leading Corporates. Sarah King says:
We know we need to see greater numbers and greater diversity in the angel investor population in the U.K. Halo allows us to spotlight brilliant, diverse women entrepreneurs to Business Leaders who - when the myths of what it means to be an angel investor are dispelled - will be in a position to invest capital, wisdom, network introductions and potentially to take Board seats to support these innovative businesses to scale.
The lack of diversity in the investment community might explain why 58% of female entrepreneurs are concerned about bias when raising capital. In the same study, 54% of UK female entrepreneurs said they have experienced bias during the pitch process, most often in the form of intrusive personal questions or a concentrated focus on the downsides of their business plan.
Women are also more likely to be questioned about their family circumstances (33%) compared to a fifth (21%) of men, showing how women are still perceived to be ‘distracted’ by family priorities .
The Funding Divide 2022 reports that 1) all male and all female pitch deck viewing times were similar but all-males teams raised 33% more on average; 2) the time spent viewing certain sections in the decks is fascinating: the team slide in all female-founded decks saw 130% more time spent on it than all male-founded teams. For all-male teams the section that had most time spent on it was the product slide (105% more time).
The findings from the report are stark - more investor engagement doesn’t mean more investment. Women and especially female founded teams with minority members, had 158% more meetings in 2021 than in 2020 but received less investment than any other demographic.
The Harvard Business Review even found that investors adopted what’s called a ‘promotion orientation’ when quizzing male entrepreneurs, which means they focused on hopes, achievements, advancement, and ideals. Conversely, when questioning female entrepreneurs they embraced a prevention orientation, which is concerned with safety, responsibility, security, and vigilance.
Clearly there isn’t one easy answer to ensuring women founders get equality and unbiased access to funding, but there are a lot of things that can be done by the VC and Angel industry to move the needle.
FounderCatalyst customer, Karishma Gupta, founder of Satatland, says her experience of the funding process has inspired her to keep sharing her story with others:
My first hand experience of going through fundraise as a female founder is that I am always asked preventive questions that focus on the risks where as my male counterparts are asked progressive questions which focus on the opportunities that the startup brings. Every Startup comes with risks and opportunities, most investor meetings are limited with time max 45 mins, when most of the time is gone in talking about the risks of the business there is no time left to talk about opportunities and the potential of the startup. There is a very big need of educating Investors on breaking the bias and how to do that.
Currently women founder teams account for 26% of our customers at FounderCatalyst, so we know we can be a big part of helping to support them in their funding journey. That’s why we are joining the #overbeingunderfunded movement, created by we are radikl, to fight for better funding for women-led businesses.
Sarah King, co-founder at we are radikl comments:
We're delighted that FounderCatalyst are joining the #overbeingunderfunded movement. Our campaign calls on the Treasury to increase the SEIS deadline from 2 to 3 years, to introduce gender, race and ethnicity reporting for entrepreneurs and investors accessing SEIS and calls on BEIS to redirect funding towards targeted awareness-raising on the role funding can play for underestimated entrepreneurs. As the campaign gets traction in Parliament it's the perfect time for the FounderCatalyst team to join us.
While I wish the calls to stop gendering business are generous, right now it is only by shining a light on the topic, making the boardroom more diverse and reflective of the people pitching, and being more conscious of how women founded businesses are evaluated that we can get to a point where gender stops being a barrier to investment.
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