The Entrepreneurs Forum and The Female Founders Association held a successful symposium at the House of Lords on the 26 October 2021.
An initiative founded by Female-founded businesses innovating to reach net zero now receive more funding than all-male “GreenTech” founding teams
Report by Aria Abu:
In the run up to COP26, a new report about the state of female entrepreneurship in high impact sectors, has found that the gender funding gap has closed in the UK's thriving GreenTech sector.
£2.8bn in equity finance has been raised by female-led GreenTech businesses since 2018.
However, progress is still needed as a funding gap remains across all equity-backed startups with female-founded businesses raising just 15 per cent of all equity finance.
There are still major investment shortfalls for female founders in other high-growth sectors such as e-commerce, AI and life sciences. Fixing this disparity will require us to tackle investor bias, promote role models and tackle structural disadvantages.
Female founders raise only 15 per cent of all equity funding, which is a shortfall of £1.6bn per year, according to a report published today by the Female Founders Forum, a partnership by think tank The Entrepreneurs Network and Barclays. In Inspiring Innovation, the think tank calls on the Government to close the gender funding gap and provide more opportunities for women to be inspired into entrepreneurship.
Commenting on the need to close the funding gap, report author Aria Babu, Head of the Female Founders Forum, said: “Women start businesses with on average half as much money as men do, as they are less likely to take out personal loans or use savings. Equity finance is critical in high-tech sectors where rapid growth is a priority and the path to commercialisation and profitability can be long.”
Progress is being made in some sectors where the funding gap has been, or is close to being, closed. GreenTech businesses, which are companies that use technology to bring us closer to net zero and other environmental goals, have closed the gap with female-founded companies making up 34 per cent of businesses in the sector but raising 42 per cent of all equity funding. But in other areas, the share of equity funding remains persistently low. For example, in AI female founders receive only 2 per cent of funding.
Katherine Morgan, Head of High Growth & Entrepreneurs at Barclays, commented: “It’s inspiring to see female entrepreneurs leading the charge in GreenTech. In the run up to COP26, innovations from these companies will be vital in helping the UK reach its target of net zero by 2050. However, despite this sector setting the standard, overall progress is stagnant – and we need investors to help women in all sectors succeed.”
Female-led GreenTech business Greyparrot, a case study in the report, is changing the way businesses deal with their waste. Using AI, the company is able to analyse, in real-time, the types of waste making its way along conveyor belts in order to increase recycling rates. To date, they have raised £4.1m in funding from investors and £500,000 from Innovate UK.
Greyparrot’s Co-Founder and CEO Mikela Druckman highlighted the importance of creating role models and supporting peers: “I was incredibly inspired by examples of women who had to break barriers in their fields, and I knew that I wanted to be able to do the same for the next generation. When most of the people in the room are still all male, it can create an imbalance. But being able to be connected with peers going through the same thing is incredibly beneficial to the entrepreneurial journey”
Outlining reasons for the gender funding gap, Babu said: “VCs invest in people like them, so with half of firms not having any female investors – and only 13 per cent of all senior decision-makers in the industry being women – female founders start out massively on the back foot. It’s very telling that once they receive equity investment, women are just as likely to successfully raise second and third funding rounds as men are - the problem is getting on that first rung of the ladder.”
The report urges VCs to review their talent pipelines and hiring practices to bring in more women at both junior and senior levels, and to expand their networks to engage with more female founders. In other areas, though, it is the Government that it calls to action, with recommendations including amending staff-to-child ratios to make high-quality childcare more affordable and introducing statutory shared parental pay to allow more equal sharing of family responsibilities so female entrepreneurs can focus more on their businesses.
The report was endorsed by the Women and Equalities Select Committee Chair, Caroline Nokes MP: “I support calls for a more diverse venture capital industry, to tackle the “leaky pipeline” of talent in STEM, and suggest ways to make childcare more accessible for working mothers.
“We cannot afford to have a recovery designed by men for men. As this report spells out, we will all end up poorer and less able to tackle the challenges of the next few decades if women are held back from founding companies and achieving their full potential as entrepreneurs, scientists, and inventors.”
Additional Quotes:
Katherine Morgan, Head of High Growth & Entrepreneurs at Barclays, said: “At Barclays, we’re committed to connecting more women with the right finance and providing skills to this generation of female entrepreneurs, as well as the next. I’m continually amazed by the innovative businesses we work with, such as Greyparrot, and I know these female entrepreneurs will continue to inspire the next generation of female-led STEM businesses. However, we need a collective effort across the industry to ensure we’re doing everything we can to make the UK the best place in the world to be a female entrepreneur.”
Aria Babu, Head of the Female Founders Forum, said: “The last 18 months have amply demonstrated the transformational, life-saving importance of innovation in life sciences. The UK spends more online per capita than any other country in the world. AI is increasingly powering the products and services we use all day, every day, whether we realise it or not. So it’s incredibly disappointing not only that female founders are so rare in these critical sectors, but even more so that the ones that there are receive such little backing from investors. This isn’t just a funding gap, it’s an innovation gap. Without more women being inspired into entrepreneurship, and given the funding they deserve, technology and science will continue to be missing vital perspectives, and huge challenges - from the impact of the ‘default male’ approach to medicine, to bias in AI - will continue to go unsolved.”
Mikela Druckman, Co-Founder and CEO of Greyparrot, said: “I was incredibly inspired by examples of women who had to break barriers in their fields, and I knew that I wanted to be able to do the same for the next generation. When most of the people in the room are still all male, it can create an imbalance. But being able to be connected with peers going through the same thing is incredibly beneficial to the entrepreneurial journey. It's not an easy journey. But it's probably one of the most rewarding journeys you can ever have.”
To read the full Inspiring Innovation report visit: https://www.tenentrepreneurs.org/s/Inspiring-Innovation.pdf
To find out more about Barclays support for Women in Business visit: https://www.barclays.co.uk/business-banking/sectors/women-in-business
Available for Comment:
Head of the Female Founders Forum: Aria Babu
Founder of GreyParrot, a waste management AI company: Mikela Druckman
Co-founder of Theolytics, a Life Sciences company using viruses to cure cancers: Charlotte Casebourne
Founder of Seraphine, a high-end maternity brand: Cécile Reinaud.
For more information or to speak with any of the female founders available for comment:
The Entrepreneurs Network: Aria Babu – aria@tenentrepreneurs.org
About The Female Founders Forum
The Female Founders Forum is a project co-created by The Entrepreneurs Network and Barclays. It was set up by The Entrepreneurs Network in partnership with Barclays, to encourage, support and promote female entrepreneurship. We seek to connect some of the UK’s most inspirational female entrepreneurs with those on the cusp of rapid growth.
About The Entrepreneurs Network
The Entrepreneurs Network is a think tank for Britain’s most ambitious entrepreneurs. We bridge the gap between entrepreneurs and policymakers, with the aim of making Britain the best place in the world to start and grow a business. We have a network of over 10,000 entrepreneurs and are the Secretariat of the All Party Parliamentary Group (APPG) for Entrepreneurship, which sits across the House of Commons and House of Lords.
About Barclays
Barclays is a British universal bank. We are diversified by business, by different types of customer and client, and geography. Our businesses include consumer banking and payments operations around the world, as well as a top-tier, full service, global corporate and investment bank, all of which are supported by our service company which provides technology, operations and functional services across the Group.
Barclays commitments to the Investing in Women Code
Barclays is a founding signatory of the HM Treasury Investing in Women Code, a commitment from the financial services industry which was launched in 2019 to improve female entrepreneurs’ access to tools, resource and finance. Barclays has committed to:
1. Helping female entrepreneurs across the UK to start up and succeed.
2. Connecting female-led businesses with the finance and support they need to succeed.
3. Providing skills for this generation and the next to help them into entrepreneurship.
About Beauhurst
Beauhurst provides research and insight on the UK’s high growth companies. Our data platform allows professionals to discover and track Britain’s most ambitious businesses in unrivalled detail.