Funding is a major obstacle for startup owners. Currently, only 9% of startup funding goes to female-owned startups. Statistics seem to suggest that men typically prefer to invest in male-owned startups instead of those owned by women. Combine this with the fact that only a third of the UK entrepreneur segment is made up by women and it's unsurprising that there was a decrease of 15% in investment in female-owned startups from 2017 to 2018. In fact, in 2018 £570 million was invested across 254 deals into female-founded companies compared to the £650 million that was invested across 304 deals in 2017.
Similarly, men are 86% more likely to secure venture capital funding than women and are 56% more likely to win the backing of an angel investor. Men also have an average deal size of £5.43 million, compared to women who only receive an average deal size of £2.22 million. In addition, women are also less likely to receive support from banks with female startup founders on average receiving 45% less money than men do when applying for a bank loan.
The statistics clearly show that men receive a disproportionate amount of investment funds compared to women. However, many of the studies referenced in this article suggest that women are actually far more cautious about starting or scaling their business and have a higher risk-awareness than men, so would, in theory, be a safer investment. Luckily, this seems to be something that alternative finance providers have understood, and there are now some who specifically work to support female-led startups with business loans.
How women are still succeeding
Despite all of the barriers that women face when becoming entrepreneurs there is a number of compelling reasons to strive to succeed. The primary reason is despite being less likely to receive investment than men, successful women-owned startup businesses make nearly double what men make per pound on average.
In addition, 55% of women said a better work-life balance was their motivation for becoming an entrepreneur. Although many small business owners struggle to keep a good work-life balance, women appreciate having the choice to work how they want, without judgement.
Where is the funding coming from?
With traditional startup funding being withheld, crowdfunding platforms have become a huge contribution toward funding female entrepreneurs. While female-founded businesses only secured 13% of venture capital deals in 2018, they did secure 20% of crowdfunding investments.
Compare this to 2012 where only 10% of venture capital deals and 8% of crowdfunding were going to female-led companies. While both have experienced growth, crowdfunding has grown at a much faster rate.
What else can we do to close the gap?
It really is just about breaking through the ice and getting more female investors on board to level out the playing field. In a male-dominated world, women find it difficult to be taken seriously, even with statistics on their side. Women are expected to prove themselves worthy in male-dominated industries and are often expected to work harder.
By increasing the number of support networks for women in business and by giving them more female entrepreneurs to look up to, women will start to feel more comfortable as entrepreneurs. By making entrepreneurship more accessible for women and increasing support for women locally, the UK can help reverse this trend.
We must all work harder to help overcome the barriers faced by aspiring and existing female entrepreneurs in the UK. This involves increasing funding to not just female startups but female businesses at any point for them to scale up. If investors and banks give women more opportunities to succeed, the UK may eventually break out of this cycle of disproportionate gender startup funding.