Female startup founders are missing out on billions of pounds of investment, new research published today finds.
The UK VC & Female Founders report found that for every £1 of venture capital investment in the UK, all-female founder teams get less than 1p. By comparison, all-male founder teams get 89p and mixed-gender teams get the remaining 10p.
The research, commissioned by Chancellor Philip Hammond at Budget 2017 and undertaken by the British Business Bank, together with Diversity VC and BVCA, identifies specific barriers faced by female-led firms in accessing venture capital. It will help inform ongoing government work to tackle these barriers and boost the untapped economic potential of businesses.
The report found that venture capital investment in startups with female founders is increasing but progress is very slow. At current rates, for all-female teams to reach even 10 per cent of all deals will take almost more than 2530 years (until 2045).
The outcome of this is that 83 per cent of deals that UK VCs made, equivalent to 89 per cent by value, had no women on the founding teams. This equates to an estimated £5bn of investment going to start-ups with all-male founding teams.
Liz Truss, chief eecretary to The Treasury, said: “In the UK, it has never been easier for a budding entrepreneur to start a business. Growing these ideas into tomorrow’s global winners takes investment, and the UK is a leading global centre for venture capital. To supercharge our economy, we need to do more to pull down the barriers that are stopping women accessing finance.”
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Alice Hu Wagner, managing director, strategy & economics, British Business Bank said: “The British Business Bank exists to lower the financial barriers that hold entrepreneurs back from achieving their ambitions.
“Experience tells us that seemingly simple solutions are attractive but flawed: mandating female decision-makers risks tokenism; earmarking ‘women only’ money does not address underlying closed networks and experience gaps. More seriously, both approaches ignore the fact that women are not the only people under-represented in VC firms and their investments.
“We need new approaches to addressing these issues and this report is just a first step.”
The research found that at the investment committee stage of the application process, 61 per cent of VC firms didn’t see any all-female teams in 2017 and a quarter (24 per cent) saw no women at all.
The disparity is partly because female founders have a very low representation in venture capital deals. Only five per cent of pitch decks which reach a VC firm are from all-female founder teams; one in five (20 per cent) are from mixed gender teams; and the remaining 75 per cent are from all-male teams.
It is well known that the low number of women in the sectors focused on by VC firms, such as software, AI and medical technology is one reason for their low representation in VC deals.