The gender funding gap: small strides to equality, but are investors doing enough?

A year on from our previous Startups exclusive data reveal, we take another look at where we are with the investment funding gap between men and women.

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13th September 2023 update

In a significant move to bolster small businesses across the United Kingdom, the UK government has allocated £1 billion through its Start Up Loans scheme.

The government website also notes that successful applicants will receive free support and guidance to help write their business plans, and up to 12 months of free mentoring.

To apply for a government-backed Start Up Loan of £500 to £25,000 to start or grow your business, click here.

Ahead of International Women’s Day, we at Startups wanted to take a data-driven look into the state of investing today. Have the figures improved when it comes to tipping the scales of gender equality in equity finance?

The short answer – they have, but not by much.

According to exclusive data from the Startups 100 Index, research has shown that men get 6.2x more funding than women in 2023, as opposed to the 7x more they were receiving in 2022.

So more female-led businesses were invested in this year – but the numbers are still exceptionally imbalanced, suggesting that the gender funding gap is still a significant issue for women in business today. From disparities in venture capital funding to the lack of female representation in leadership positions, this report details the complex issue of the gender funding gap and how investors can close it.

A look into funding

Our results show that, on average, a female-founded business receives £763,300 in funding, compared to a staggering £4.7 million for a solely male-owned organisation.

The presence of a male co-founder boosts the perceived value even further however, with the funding for businesses with both male and female founders averaging at £6.2 million this year.

This is an interesting step forward from 2022 results, which still had the funding of solely male-owned organisations in the lead at £4.34 million.

So, why is there still such a large disparity between men and women in venture capital? Part of the problem is that women are still underrepresented in the venture capital industry, making up only 15% of the decision-makers in the UK, according to European Women in VC

This can mean that the perspectives of women are not being considered enough when decisions are made about who should get funding. 

The mental health impact on female business owners

The ways in which the genders currently approach funding is also interesting.

We discovered that women created a record number of 151,603 new companies in 2022 in the UK, and half of those female-founded businesses are bootstrapped or self-funded, compared to just 32% of male organisations, as shown in the table below:

Funding TypeMenWomenMen + Women
Angel Investment32%22%26%
Bootstrapping32%50%33%
Business Loans2%5%2.5%
Private Equity Funding16%6%12%
Crowdfunding3%2%2.5%
Business Grants1%3%0%
Family & Friends2%2%6%
Other12%10%18%

Female entrepreneurs choosing to fund their businesses themselves is a symptom of women seeing the gender disparities, and believing they won’t have as much of a chance as male founders.

Bootstrapping not only increases personal financial risk, but also the chance of the startup’s failure – often causing a cycle of negative self-fulfilling prophecies.

“Confidence is a huge issue”, says Sahar Hashemi, CEO of Buy Women Built. “If you feel the statistics are against you, no one will ever try.”

We mainly talk about physical labour costs, but this is an emotional labour that businesswomen are also taking the burden on. 

If women’s initiatives continue to be largely neglected from a funding perspective, not only can this have a stressful emotional impact, but there’s also the huge economic impact to consider due to all the opportunities missed simply because they were never given any oxygen.

Empowering female initiatives

Female entrepreneurs contribute £3.51 billion to the UK economy each year.

Let’s take a look at some of the female initiatives that are fighting to maintain the drive and enthusiasm of female entrepreneurs so that new, inspiring and essential businesses can come to fruition this year:

Alison Rose, The Rose Review

According to an independent study by Alison Rose, CEO of The NatWest Group & The Rose Review, £250 billion could potentially be added to the UK economy if women matched men in receiving investment for their fledgling businesses.

The Rose Review has just released its outline of new initiatives to help more women to start and build thriving businesses in 2023.

Melissa Snover, Nourished

Melissa Snover, CEO & Founder of Nourished, and an esteemed member of our Startups 100 list 2023, secured £1.95m in the highest seed round ever raised by a female founder

After growing frustrated with having to ingest multiple tablets to meet her health requirements, she decided to build a more convenient – and personalised – way to take all of her daily supplements in one go. The result is Nourished, a disruptive new vitamin brand that makes personalised, 3D-printed gummies.

Since then, Nourished has gone on to raise a further £8m in a successful Series A.

She has some wise words for the female entrepreneurs out there right now:

“Firstly, surround yourself with a great team. You’ll be surprised at how much of your time is taken up by preparing materials for securing investment, so it’s crucial that you can delegate other day-to-day items to your team. If you can’t trust your team, then you won’t be able to commit the time you need to securing investment as you’ll still be picking up the wider workload.

It’s also imperative that you sell your investors a story when pitching. Obviously, if your numbers don’t make sense, or are poor, then it’s not going to work out. But if your story is no good, no one will be listening by the time you get to the numbers. To a certain extent, investing is an emotional decision; you have to bring them with you on a journey and make them trust you, and you do that by making a connection through your story.

Lastly: don’t be intimidated! We don’t have enough female entrepreneurs backing themselves and their brilliant ideas in this country. If you have an idea that you believe in, then believe in yourself to convince others. Build a fantastic team, nail your pitch down and go for it!”

Tory Burch, The Tory Burch Foundation

Tory Burch is an American fashion designer and businesswoman who was listed as the 88th most powerful woman in the world by Forbes in 2020. 

She is also a dedicated philanthropist and CEO of the Tory Burch Foundation, launched to exclusively provide support to female entrepreneurs. 

The Tory Burch Foundation empowers women and women entrepreneurs by providing access to capital, education and digital resources. Her website is a complete resource for upcoming campaigns (such as the ‘Color Brave’ campaign that set out to provide diversity and equality resources for businesses), webinars, grants and mentorship for women of all ages.

According to Forbes, Tory Burch LLC has given £52.4 million to the foundation since its inception, and to date, distributed over £62.4 million in loans to nearly 5,000 women.

More Inspiration

For more inspiration, take a look at the female business owners, their net worth, and why you should never underestimate the power of women and their place in our global economy:

  • Zhang Xin, real estate, £1.6 billion
  • Kiran Mazumdar-Shaw, biotechnology, £1.7 billion
  • Janice Bryant Howroyd, employment agency, £830 million

*Prices reported as of 2023

Next steps for female entrepreneurs

If you are a female entrepreneur looking to start a new business venture, it would be easy to feel put off by our research. But don't worry – the team at Startups is here to help.

We are the UK's number one independent small business online resource. You can read any of our thousands of guides for information on everything from the best business grants for women, how to write a business plan, and even inspirational entrepreneur success stories.

Written by:
Stephanie Lennox is the resident funding & finance expert at Startups: A successful startup founder in her own right, 2x bestselling author and business strategist, she covers everything from business grants and loans to venture capital and angel investing. With over 14 years of hands-on experience in the startup industry, Stephanie is passionate about how business owners can not only survive but thrive in the face of turbulent financial times and economic crises. With a background in media, publishing, finance and sales psychology, and an education at Oxford University, Stephanie has been featured on all things 'entrepreneur' in such prominent media outlets as The Bookseller, The Guardian, TimeOut, The Southbank Centre and ITV News, as well as several other national publications.

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