As part of our Female Entrepreneurship Series one of the key areas that have been highlighted in the Alison Rose Review, and by the women we spoke to during our research was the difficulty in securing investment to scale their business.
Of all the venture funding secured by businesses in the UK, only 1% goes to all-female teams, 10% goes to mixed gender teams, and a whopping 89% goes to all-male teams! A shocking statistic – but why?
Perception of Risk
One theory is the different perceptions of risk between men and women – women are much less likely to borrow money for their business, and if they do, it is likely to be smaller amounts.
Women typically have higher risk-awareness than men and are more cautious about starting or scaling a business, limiting their willingness to risk their livelihood on an uncertain venture, as cited in the Alison Rose Review.
Jennifer Bailey, Managing Director of Calla Shoes, a brand that designs fashionable footwear for women told us, “We are brought up to be careful with money and not take on debt for things we can’t afford but running a business is a completely difference mindset – you need money to grow.”
Female Representation on Funding Boards
With just 13% of senior people on investment teams being female, and 48% of investment teams featuring no women at all – it’s perhaps not surprising that women do not feel represented when they pitch for funding. Furthermore, a great many ventures by women exist to solve a problem that affects other women, posing a challenge of relate-ability to the people choosing to make an investment.
We spoke to Claire Young, Award-Winning entrepreneur, CEO of School Speakers and journalist & radio presenter in addition to advising the government on a range of projects supporting young people and women. Claire was also a finalist on The Apprentice. She told us, “Cultural bias is a problem; a lack of women being visible doesn’t encourage other women to step forward, often those giving the funding are men and they are surrounded by men – it’s a self-fulfilling prophecy”.
We asked Claire whether she had any solutions to improve the allocation of funding to female backed enterprises, she is in favour of unnamed, gender-less funding applications and investment given against robust business ideas and plans – not networks or relationships.
Advice for Women Seeking Investment
If you are looking to secure investment into your business, we have this advice:
- Try to connect and network with successful women who have been there and done it. Other women who have themselves received investment may give you some insight into the process and the challenges they faced along the way.
- Consider whether you are looking for equity investment or a business loan, while a business loan has to be repaid, it can be processed much quicker than rounds of funding panels and will allow you to retain control of your company
- What would you do if you knew you couldn’t fail? The fear of failure stops many women in their tracks from scaling their business. You have got this far, if you are already running a profitable business with proven traction then you can go further if you believe in yourself!