Happy International Women’s Day!
To mark the day, the Government has announced the 40 winners of the Women in Innovation Awards. The awards, which give £50,000 to each winner as well as bespoke mentoring, are to help female entrepreneurs drive forward their pioneering products and services. This is a very welcome initiative, especially as when the competition was first announced, there were only going to be 10 winners.
There is a large gender gap in entrepreneurial activity. The Rose Review of Female Entrepreneurship found that only 1 in 3 UK entrepreneurs is female. The same review found that SMEs established by men are five times more likely to scale up to £1 million turnover than those founded by women. In 2016 it was estimated that fewer than 6% of working-age women are engaged in early stage entrepreneurial activity, compared to more than 10% of men.
Overcoming this is an important goal in itself but it would also represent a huge economic boost. The government’s press release states that boosting the number of female entrepreneurs could deliver £180 billion to the economy. Deloitte has found that targeted help for early stage female entrepreneurs could provide a £100 billion boost to the UK economy over the next ten years.
Women face additional barriers at every stage of starting and growing a business. The additional challenges that female entrepreneurs face are burdensome:
1. Funding – female-led businesses receive less funding than those headed by men at every stage of their journey. The British Business Bank found that only 1% of all venture capital investment in the UK goes to businesses founded by all-female teams, with 10% going to businesses founded by mixed-gender teams.
2. Lack of mentors and networks – a consistent finding in the reports on this topic, is that female entrepreneurs do not have the same amount of role models and mentors to help develop and inspire them as their male counterparts.
3. Care – The Rose Review found that for female entrepreneurs with children, primary care responsibilities are the top barrier to further business success, with 46% of female parent entrepreneurs identifying it as a “very important” or “important” barrier versus 33% of male parents.
4. Perception of skill gap – again a consistent finding has been that women felt less confident in their capabilities to start, run and grow a business. This is a perceived rather than actual skill gap. The Rose Review found that this was intensified by many women having “the perception that there is an underlying attitude among some men…that women do not really belong in the entrepreneurial world.”
There is evidence that the pandemic has made these challenges even harder. A report by the Entrepreneurs Network found that female-founded equity-backed businesses were twice as likely to have faced significant disruptions than those founded by men. The report outlined that the main reasons for this were the pre-pandemic funding gap, that women were doing more unpaid work in the home than men, and that women are also more likely to be founders of start-ups in industries that were worse affected by the pandemic.
Some of the problems outlined are relatively straight-forward to address and initiatives such as the Government’s today are welcome in boosting funding and providing mentors.
Universities can also play their part. As Oxford Brookes University have outlined only 13% of active university spinout companies across the UK are founded or co-founded by a woman or a mixed gender team. To increase this proportion, they set out a series of recommendations for universities including:
- Supporting the development of networks of ‘relatable mentors.’
- Increasing the flexibility of available career pathways and provide space and opportunities to accommodate inclusive and alternative career routes.
- Encouraging Technology Transfer Offices (TTOs) to foster more diverse networks of expertise and seek out diverse talent.
- Communicating clearly the different sources of financial support for academic entrepreneurial activities and spinouts.
- Developing policies and practices to allow researchers to balance an academic career with commercialisation of research and spinout leadership.
However, while these measures will help to address the first two challenges, the latter two challenges are much more deep-seated problems. Changing perceptions and equalizing caring responsibilities require thoughtful government policy to address a wide-range of structural challenges related to childcare, women returning to the workplace from maternity leave, and effectively challenging stereotypes.
Without addressing these problems, difficult though they are, we cannot maximise the benefit of providing equal opportunity to women hoping to start and then scale up their own business.