Posted: Wed 7th Dec 2022
Almost three quarters of UK female founders running high growth businesses believe that it would be easier to raise funding if they were a man, with one entrepreneur describing parts of the investment process as a "boys club".
That's the finding of a new report by the Female Founders Forum (FFF), which surveyed 59 women business owners who have raised at least £1m in equity finance.
Of those questioned, 72% believed being a male founder makes it easier to secure investment, and 59% felt they had been discriminated against because of their gender.
Only 16% of equity funding in the UK goes to companies with a female founder, despite women making up a third of business owners.
Hannah Feldman, co-founder of family activities platform Kidadl, said:
"Women are rarely asked expansive questions - for example how big our business will be, what proves we will become the market leader, how can we turbo-charge our growth?”
"Instead certain conversations have been focused more on any possible risks, limitations or blockers that could get in the way of our success. I have even been asked on more than one occasion who is looking after my kids when I am attending one of these meetings, which I struggle to imagine a male founder being asked."
Access to networks
The report highlighted that one of the key challenges for female founders seeking finance is access to investor contacts.
A report for the Investing in Women Code found that investors are twice as likely to invest in someone they know through a 'warm' connection rather than through cold approaches, but 80% of the women surveyed in the FFF study believed men have access to better networks.
Cindy van Niekerk, CEO of due diligence platform Umazi, previously worked in finance and said "there are pockets and corners that felt like a boys club".
Jemma Phibbs, founder and CEO of event venue booking service School Space, added:
"VCs should create more opportunities to meet them. It's still incredibly dependent on intros, which I understand but it makes it harder for people without personal connections."
Cost of childcare
Another challenge for female entrepreneurs is the high fees for sending their children to nursery.
The UK has the most expensive childcare in the OECD, which typically results in mothers disproportionately exiting the labour force, according to the report.
It also claimed female founders are held back by a "chore-gap", with half of the mothers in the survey saying they still do the majority of the housework despite running successful companies.
Sarah Hesz, CCO of childcare booking app Bubble, said:
"Childcare is a luxury that many families can't afford, forcing women to give up their jobs and trapping families into a cycle of poverty.
"The number of women not returning to work after they have kids is on the increase because childcare costs are making it impossible. This is a trend that we desperately need to reverse in order to ever be able to achieve gender equality."
Aria Babu, head of the Female Founders Forum, added:
"Women are being held back by the high cost of childcare. We don’t have particularly high wages, we don’t start school particularly late, we don’t have a particularly high birth rate, nor do we provide particularly low levels of subsidy. The UK is an outlier in only one way - cost.
"Women are being forced back into the home with 40% of mothers saying they have had to work fewer hours because of childcare costs. The government has to address the rising costs by dealing with the red tape that stops people from caring for children in their communities or that stops them from starting their own childcare businesses."
Recommendations to government and investors
As well as calling on the government to tackle the high costs of childcare, the report said ministers should better promote the progress made in opening up female founders' access to finance by signatories to the Investing in Women Code. This would highlight best practice and encourage more sign-ups.
The report said the government should also promote connections such as building in peer-to-peer networks as part of the ongoing support it offers when providing a grant via Innovate UK.
For investors, FFF said more women should be encouraged to work in the venture capital industry. Currently, only 13% of senior decision makers are female, and 83% of firms have no women on their investment committees at all.
Investors should also accept more cold approaches, make an effort to meet more founders and address unconscious bias.
How female founders can access investment
The report provided advice to female entrepreneurs themselves for how they can attract equity investment:
Many of the founders interviewed felt that male entrepreneurs' confidence allows them to ask for more favours. Female entrepreneurs should have the confidence to ask their networks for introductions to the people they need to meet.
Proactively seek an even gender–split for household chores
Our culture automatically defaults to women taking on a greater share of household responsibilities. It takes proactive work to make sure that you don't slip into a mother–as–default parent role, if you don't want that.
Take control of your brand
There are extra media opportunities available to female founders. Founders should clearly understand what story they want to tell about themselves and seek out opportunities that best serve their brand.
Recognise your value
While there are disadvantages to being a female founder there are also clear advantages. Depending on the context of a founder's business and character, she may be able to offer extra insight into her customers and employees. Female founders are proving to be incredibly successful at serving hitherto underserved markets. For example, FemTech is largely a new sector created by women for women, and is growing year on year.
Relevant Enterprise Nation resources
Online group: Women in Business Network
Blog post: Female founders share very honest advice
Connections: Free call with a finance expert
Campaign: She Means Business