Press release

New analysis: Female entrepreneurs seek less seed funding than men

New analysis: Female entrepreneurs seek less seed funding than men
Enterprise Nation
Enterprise Nation
Enterprise Nation

Posted: Fri 22nd Mar 2024

Female entrepreneurs seek lower amounts of seed funding than their male counterparts, a new analysis has found.

The Small Business Barometer, a quarterly survey from small business support platform and membership community Enterprise Nation, found while women sought funding in similar proportion to male founders (53% v 55%) they were 20 per cent more likely to seek under £10,000.

It is at the higher levels of investment that they fall behind. Only two per cent of women said they were planning to raise more than £1m, compared with five per cent of male-founded firms. Even at more modest sums such as between £40,000 and £50,000 women fall four percentage points behind, with men consistently outnumbering women at every higher funding level over £10,000.

They are also more likely than men to pay themselves less in the early stages, with 56 per cent saying they pay themselves less than £10,000 as they build their firm, compared to 42 per cent of men.

The analysis, which looked at start-ups, early stage and micro firms' performance in Q3, 2023, found male-led firms were seven per cent more likely to hike prices between 20 and 30 per cent than those run by women. At the same time, it found women were more likely than men to raise prices between a more modest 10 and 20 per cent in response to higher costs (56% v 50%).

But while women were half as likely as men to have closed a previous business, (11% v 21%) and they are also more likely to reach out for help and support, (49% v 44%).

Emma Jones CBE, founder of Enterprise Nation said:

"Women are more risk averse than men with the finances in the early stages of building a business.

"This is because they are often starting businesses as they cram a full-time job and around caring responsibilities, whether that be children or older parents.

"From my own personal experience, I know the feeling that you don't want to 'bet the house' on raising money in case it goes wrong. This is a business protection sentiment that I feel particularly applies to female founders.

"What is clear is that we need to do more to help women raise the funding bar and understand the benefits of taking on finance at an earlier stage, building ambitiously in order to create more flexibility and a better work/life balance further down the line.

"Much of this can come down to working on financial forecasts to see the positive impact of taking on investment. We also need to work harder to connect women to networks that can support them in doing so."

The analysis found women were significantly more cautious about their expectations to expand. While a third (31%) of women said they were quite likely to expand over the next 12 months, male founders were seven percentage points ahead (38%). Female founders were also twice as likely as men to say there was 'no chance' of expansion (10% female v 5% male founders).

'I wish someone had talked to me about that before'

Leeds-based Victoria Tomlinson launched her own tech platform in 2023 but made the decision to self-fund from savings. She says women are put off from applying for investment because they aren't treated equally by investors.

Victoria said: "I'm 68. Over time I have come to understand that it's not always healthy to borrow money - you're in the hands of your funder. We used to reckon that you need to keep six months funding in liquid assets as you don't know what's going to hit you. I wish someone had talked to me about that before.

"I think it's unsurprising that women aren't seeking investment, I have seen too many women treated appallingly by what is still mostly male founders of VC investment companies."

'Women don't want anyone to think they're too big for their boots'

Kendal-based business coach Rebecca Batstone agrees. She coaches women running businesses in the North West of England and says they're just not thinking about risk and investment as a route to growth. She said:

"Nine times out of 10 the women I coach have never thought about looking externally for funding.

"Women founders often don't want to get too big; they don't want to put their head above the parapet or for anyone to think they're 'too big for their boots'.

"Don't get me wrong, women are growing businesses to a size they are happy with, with no need for finance, but rather than taking on funding, they're growing organically. What they don't realise is that it's taken five years, when with investment, it could have taken two."

She added:

"There's a lack of knowledge about where to go to get that information and support. A lot of women aren't comfortable about finance, but education is empowering.

"It's actually easier to get finance for your business that anyone thinks it is. Managing it is easier than you think it is and that can be taught.

""It's often negative self-talk that holds women back as well as a lack of visible and accessible role models of really successful women who have brought investment into their business. They just can't picture themselves doing it."

'We're very much driven by freedom'

Nicole Szekeres is the co-founder of Fusion Bags, a company that designs and makes sturdy travel bags for musical instruments used by musicians all over the world. Based near Harrogate in West Yorkshire, Nicole and her co-founders self-funded the company with investment from family members as well as match-funded grants. Nicole said:

"We're very much driven by freedom. Bringing a big investor in telling us what to do was not what we wanted when we started the business. Before the pandemic, we were looking at getting an external investor, but then Covid hit and everything changed dramatically."

The pandemic had a big impact on the business, as musicians were not able to perform. She took out a Bounce Back Loan.

"It made us reevaluate where we spent our money and whether the value we got in exchange was worth the expenditure. The Bounce Back Loan helped us get through the pandemic financially, but it was the collaborations that we organised during that time that helped us create a tighter community and brought some positive energy into a business during a very difficult time.

"It showed us that investment in a business does not have to be monetary; it can also be creative, and the #musiccannotbeconfined collaborations were just that."

'Being a woman means we can't let those inhibitions go to take those risks'

Peterborough-based Sonia Rogers is at the pre-start phase of her business Linksconnect, an online platform to connect local businesses with availability, with new customers.

But she says investment is a scary prospect, due to imposter syndrome. Sonia said:

"I used to work in a high-pressured manufacturing environment, but I burned out. My self-esteem went boom. I used to be able to retain information and customer names from many months ago, it disappeared overnight. And my emotions went wild - I could cry at the drop of a hat, which doesn't work very well in a manufacturing environment.

"Starting a business has always been my dream -- I always wanted to have that flexibility. There are 8,000 dog groomers, hairdressers and beauty salons in the East of England who all have spare hours in the day they'd like to advertise in some way.

"I will need some funding for the tech build because I can't contribute personally - but I don't think I could go down the investment route, I am looking at grants for innovation and something more manageable. I think being a woman means we can't let those inhibitions go to take those risks, like perhaps men do. But I am aware it's you yourself that is the real barrier to get over to achieve success."


About Enterprise Nation

Enterprise Nation is a business support platform and provider delivering support to more than 800,000 small businesses a year in the UK and Ireland. Its aim is to help people turn their good ideas into great businesses -- through expert advice (including a comprehensive resources library), events, acceleration support programmes and networking.   

Enterprise Nation was founded in 2005 by British entrepreneur Emma Jones. She is author of best-selling business books and is a frequently called-on and regular media commentator on a range of issues which affect the UK's growing number of SMEs.

Enterprise Nation
Enterprise Nation
Enterprise Nation
Enterprise Nation has helped thousands of people start and grow their businesses. Led by founder, Emma Jones CBE, Enterprise Nation connects you to the resources and expertise to help you succeed.

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