Females to the fore

The statistics relating to female funding are sad to see, but they can easily be changed through mindset, belief and support not just from male investors, but female ones too. We need to encourage women to ‘make the ask’ when it comes to funding and provide more opportunities for women to meet suitable investors for their companies.

Organic growth does happen, but it takes a long time to generate the required finance in-house, so their true potential is simply beyond reach. I’m not pointing a finger at any particular investors; I think the bias towards men isn’t a conscious choice and there are many factors that influence funding decisions. The first step is to bring the issue to the forefront of people’s minds, something that will go a long way towards changing the status quo.

The second step is to encourage more women who have set up businesses to ask for funding. The more women who apply for funding, the more investors will start to see them as a mainstream option, not an anomaly.

Ways to reduce the funding gap for women

• Get involved in female-oriented venture capital events If both women business leaders and investors were more involved in VC events and groups that are focused on women, the greater the understanding would be of both sides of the equation. These events and groups already exist and would benefit from increased involvement from both investors and female business leaders, whether or not they’re currently looking for investment. Women who are already established are first-class role models for those who are still in the initial growth stage.
• Measure results It’s not just about making plans to improve funding, but about setting targets and then measuring progress. It’s important to have clear goals and the metrics to support those. Those forums, organisations, groups and events that feature business funding can all be involved in achieving targets.
• Adjust investment guidelines The more investors who are willing to fund smaller companies the better.  Engaging with small companies with big ideas – and a sound business plan – can be the route to significant profits for everyone concerned. In fact, if venture capital firms had targets for investing in female-led companies, that alone could make a massive change. Seeing women business leaders fulfilling their targets will reposition them as an attractive prospect for funding.
• Diversity in leadership Successful businesses are led by every gender, colour and ethnicity. 21st-century investors need to be aware of the diversity of the companies to whom they lend money – and that includes women. Monitoring and evaluating the diversity of investments will flag up the overall profile of an investment portfolio.
• Take a grassroots approach to funding When it comes to funding opportunities, it would benefit business and the economy in general if investors assigned a portion of their funds to support smaller projects.

Small doesn’t mean unprofitable; every business started somewhere and because a business happens to be led by a woman doesn’t mean it’s a hobby. Women with a vision are just as driven as men, if not more so. Investors who support the acorn businesses can be in at the start of something that rapidly grows into a mighty oak.

Take an enlightened approach

Standard financial products don’t always work for women, so investors need to take an innovative approach and view the advantages of working with female-led businesses. Most female entrepreneurs are driven and highly invested in their businesses and will do whatever it takes to make it work. The fact that there are so many successful female-led businesses demonstrates that the truth of this – despite often being under-funded.

The Alison Rose Review identifies the potential value to the UK economy from female-led businesses to be in the realm of £250 billion. However, to achieve that, those businesses will need a financial shot in the arm to help them grow. The review highlights that women in the UK established more than 150,000 new companies in 2022, doubling the figures from just four years earlier; over eight per cent of these were started by 16-25 year olds snd age is often another reason investors discriminate.

There is a Women Backing Women campaign, launched by the Women Angel Investment Taskforce, that is helping to unlock early-stage investment funding for female business owners. This is one of the strategies that are paving the way for other investors to follow.

Nearly 200 banks, venture capital firms, angel syndicates and other financial organisations (representing an astonishing one trillion pounds sterling in assets) have signed up to the Investing in Women Code. This represents only a small percentage, however, of the total financial services industry – many more are needed.