Can ‘Code for Investing in Women’ boost female entrepreneur numbers?
The UK is the start-up capital of Europe. Yet women still face too many investment barriers when setting up a business. So much so it may actually be damaging the UK economy and the government is stepping in to address matters.
Now UK banks, investors and other lenders are finally being pushed to publish the amount of funding they provide female-led businesses. This is just part of a new voluntary investor code launched by the UK Treasury in a bid to boost numbers of female entrepreneurs.
The ‘Code for Investing in Women’ is driven by the findings of a government review published by Alison Rose, the deputy chief executive of NatWest. The review exposes shocking gender investment gap figures and the negative impact this investment disparity is having on the UK economy.
So now, as several large banks are ready to sign up to the initiative, will women-led businesses finally get equal support and investment? Does the Code actually go far enough to boost the UK economy?
Reviewing female entrepreneurship
While the gender gap has been a business investment issue for years, findings in The Alison Rose Review of Female Entrepreneurship report have finally convinced the Treasury to act.
The report outlines a clear disparity between female and male entrepreneurs. Explaining how this is holding the UK back, and plans to release the enormous unrealised potential for the UK economy.
Statistically, women make up just a third of the entrepreneurship force in the UK. By boosting the numbers of female-led business, which equates to 1 million missing businesses, the UK economy can benefit from additional £250 billion in GVA.
The data shows that female-run businesses are often half the size of firms led by men. Shockingly, they are also 5 times less likely than men to scale up to £1 million turnover.
Aims to increase female entrepreneur numbers 50% by 2030
Addressing gender inequality issues in business is the first step. Unfortunately, there are many areas that need work.
To start with, female entrepreneurs receive a meagre share of funding.
Another Treasury report Women in U.K. Venture Capital, undertaken by the British Business Bank, found glaring investment inequality. That for every £1 of venture capital (VC) investment in the UK, all-female founder teams get less than 1p, all-male founder teams get 89p, and mixed-gender teams 10p.
The Rose Review has in fact confirmed the gender parity gap has widened since 2013. While the numbers of male-led businesses are flourishing, women’s confidence in opening and running a successful company is in decline. Currently, only 5.6% of women decide to start up their business.
Empowering women creates a stronger economy
Anyone with the drive and skills should be able to start up and scale up their business, immaterial of their gender. And without a doubt, women are as talented and capable of running companies as men.
However, funding inequality is just one barrier to empowering women-led business. Insufficient family support, lack of relevant networks and mentors are also top obstacles crippling this potential.
The Rose Review also identified 8 long-term recommendations, empowering women at different stages of their entrepreneurial journey.
- Promote greater transparency in UK funding allocation, by inviting financial institutions to get involved in Investing in Women Code
- Launch new investment vehicles to increase funding going to female entrepreneurs
- Encourage UK based institutional and private investors to further support and invest in female entrepreneurs
- Review existing and create new banking products aimed at entrepreneurs with family care responsibilities
- Improve access to expertise by expanding the entrepreneur and expert in residence programme
- Expand existing mentorship and networking opportunities Networks are a powerful mechanism to give aspiring business
- Accelerate development and roll-out of entrepreneurship-related courses to schools and colleges
- Create an entrepreneur digital first-stop shop
So, the recommendations go beyond business guidance and on to encourage the next generation. With aims to boost female engagement in entrepreneurship and to promote entrepreneurship among 15-18 year-old schools girls.
Investing in Women: A real opportunity for the UK economy
The Treasury initiative is a very positive step in the right direction. Backed by a breadth and depth of support from the wider government, as well as major UK businesses.
The proportion of small and medium-sized companies led by women is slowly growing, and the creation of this initiative is a cause for optimism. But only if the promises are backed by actions and all the review recommendations are adopted across the UK. “Real change to break the glass ceiling”, as commented by the Prime Minister.
As Ms Rose noted, “The UK has one of the most vibrant entrepreneurial communities in the world, but only one in three of our entrepreneurs is female — we need to be more ambitious and find ways to unlock the huge untapped potential.”
The UK investment industry has been given a unique opportunity to lead the way for UK business. A chance to narrow the gender gap, and in doing so give the UK economy a powerful boost. Let’s all hope they take it
Our team at Maxwell-Davies strongly believe in empowering women in business.
If you are a female entrepreneur whose business is going through a difficult financial period, contact us for a free consultation.
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