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The U.K. startup scene is cool, modern and populated by entrepreneurs, skilled workers and investors who, generally speaking, come to the party with impeccably progressive attitudes. So why then are female entrepreneurs outnumbered by their male colleagues? And why do women find it harder than men to raise the money they need to develop and grow their businesses?
OK, that opening paragraph does contain some sweeping statements. There is probably no evidence that U.K. entrepreneurs - and those who invest in them – are any more liberal or progressive than the population at large, but in the tech sector at least, founders tend to be relatively young. And as such, they are the product of a generation that has grown up in a time when gender equality is seen as a given. Logically, then, there shouldn’t really be any imbalance when it comes to the number of men and women who are starting, growing and ultimately selling their own companies.
And nor should women find it harder to raise finance, but sadly it seems to be the case that male investors are more inclined to invest in other men. For instance, a recent survey by the UK Business Angels Association found that while 20% of female angel investors had backed between three and ten women , only a tiny number of male investors had done the same. It’s a statistic that suggests at least a degree of conscious or unconscious bias on the part of investors.
Deep Seated Challenges
But before we rush to condemn those angels and VCs who have yet to wake up to smell the gender-equality coffee, it’s worth remembering that female entrepreneurs face challenges long before they get to the point where they begin to raise finance. Many of these factors are societal and historical.
At least that’s the finding of a new survey by venture capital fund IW Capital.
According to IW Capital’s Women’s Entrepreneurship Index 2018, men tend to start out on the entrepreneurial road with more resources behind them. For instance, men are three times more likely to have £250,000 or more in assets that can be invested. Looking a the same issue through a slightly different lens, 35% of men have more capital than their parents did to put into a new business venture compared to just 23% of women.,
We are, of course, talking averages. There are plenty of women who have enjoyed successful careers and who consequently have the money or property wealth set aside that will enable them to bring their business ideas to fruition. But as the IW Capital report shows, there is a feeling among a significant minority of women employees that their skills and potential are not being recognized, or properly re
warded, by employers. 34% of those questioned said they were disillusioned by the corporate ladder and one fifth said they had been encouraged to begin their careers in roles that were not commensurate with their skills and aspirations. Arguably this in itself could be a spur towards entrepreneurship, but a gender gap in workplace reward also puts a ceiling on available resources.
IW Capital Founder, Luke Davis has personal reasons for commissioning the report. As he explains, his wife – a lawyer – had encountered institutional sexism during her career and is now in the process of setting up a legal firm to address those issues. “I wanted to get a real understanding of the factors that affect women in business,” he says.
But despite some of the key findings of the report, Davis is something of an optimist. “Now is the best time for a woman to become an entrepreneur,” he adds.
Squaring The Circle
As he sees it, many of the societal inequalities that can result in women having, say, less available capital to start a business or fewer opportunities to climb the corporate ladder are slowly but surely being erased. And ultimately, greater equality in the workplace, help create the conditions where women are as likely as men to succeed in their careers and ultimately go on to start and run increasing numbers of thriving businesses.
Equally, he believes that the perceptions of VCs and other investors are also moving in step with the times. “As millennials come through, unconscious bias against female entrepreneurs is becoming less of a problem,” he says.
But there is still undoubtedly – as the survey shows – a gender gap. “Encouraging investment into female-founded businesses is clearly something that must be improved upon through legislation as well as fostering an environment in which women feel that they have the support and resources available to start businesses,” he says.
Work in progress, then.
December 16, 2018 at 10:28AM
Forbes – Entrepreneurs