The government has backed a call by an official review into barriers facing female entrepreneurs to create women-focused financing vehicles.
The Rose Review, led by NatWest deputy CEO Alison Rose, has called for UK banks and investment funds to focus more in the next generation of female business owners.
Female-led businesses receive less funding than those headed by men at every stage of their journey. Women entrepreneurs names start-up funding as the biggest barrier facing them. Fewer than one in 10 pounds invested in British startups go to women-run business, according to a separate report from the Enterprise Investment Scheme Association and IW Capital.
Women launch businesses with 53 per cent less capital on average than men, are less aware of funding options, and are less likely to take on debt.
The Rose Review said that perceived bias within the UK venture finance community was a concern. Only 13 per cent of senior people on UK investment teams are woman, and almost half (48 per cent) of investment teams have no women at all.
Less than 1 per cent of UK venture funding goes to all-female teams and just 4 per cent of deals.
“I encourage all relevant financial institutions to take steps to improve how they allocate funding to female entrepreneurs,” Treasury exchequer secretary Robert Jenrick said, responding to the review.
In response, the government has also launched a new Code for Investing in Women to held increase female entrepreneur numbers by 50 per cent to 600,000 by 2030. Banks and other financial institutions that sign up to the code will publish the gender split of investments they make, showing if businesses are either male or female-led. The idea is to encourage financial institutions to adopt best practices that will benefit female business owners. Lloyds, UK Finance and UK Business Angels Association have already committed in principle to the code.
Only one in three entrepreneurs are women, the review found — a gender gap equivalent to over one million fewer female entrepreneurs in the UK.
Businesses that are run by women are on average half the size of male-led firms and far less likely to scale up to a £1 million turnover.
Closing this gap between women and men could add an additional £250 billion in GVA to the UK economy, equivalent to four years of economic growth, the review found.
The Treasury commissioned the independent review to identify barriers holding back women entrepreneurs and recommend what could be done to overcome them.
Deputy CEO of NatWest Alison Rose, said: “It is imperative that we support female entrepreneurs and capitalise on the missed opportunity which is significant, equating to more than one million missing businesses and £250 billion for the UK economy.
Treasury exchequer secretary Robert Jenrick added: “Today’s businesswomen face too many barriers to setting up and scaling their enterprises. This doesn’t just hold back women, but every single one of us.”