The challenges faced by female founders
The recently published (February 2023) Rose Review Progress Report 2023 on female entrepreneurship shows that more women than ever are starting their own businesses. Over 140,000 all-female founded companies were created in 2022, which is up from 56,200 in 2018, growth of over a third in the last three years. It means that in total over 20% of new companies are now led by women (up from 16% in 2018), a record high.
Research shows that women-led start-ups are a good investment, outperforming companies led by men. The first Alison Rose Review of Female Entrepreneurship published in March 2019 highlighted that if women started and scaled new businesses at the same rate as men, up to £250bn of new value could be added to the UK economy.
Why then do women still face more challenges than men despite research telling us that businesses founded by a female entrepreneur represent a huge opportunity?
The recent statistics are great news but there is still work to be done.
The challenges facing a female entrepreneur
1.
The funding gap
Women are missing out on funding. This is probably the number one barrier for female entrepreneurs at every stage of their business journey. The gender pay gap is well known but less known is the funding gap between female-led and male-led companies. The male-dominated investment industry seems to be skewing their access to finance.
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Women attracted less than 12% of the 1.3 million investments made in UK firms in 2021 – that equates to just 0.1% of UK private equity investments (by value) and 0.5% of UK venture capital investments (by value).
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By contrast, 61% of active companies are led by men and attracted two-thirds (66%) of all investment.
These figures are taken from The Gender Index, launched in March 2022, to gain a clear picture of female run companies.
Presenting a similar picture, research in 2022 by startups.co.uk revealed that businesses with male founders or co-founders receive nearly seven times more funding on average than businesses owned by a female entrepreneur.
2.
Bias and discrimination
Bias and discrimination towards female founders is commonplace.
A recent Telegraph poll found that two-thirds of 750 female founders felt they were not taken seriously when pitching to investors, and felt they were treated differently to their male counterparts.
In a survey by Simply Business in 2022, 91 per cent of women business owners said gender bias or inequality is prevalent in business, with a third describing it as ‘widespread’ or ‘severe’.
3.
Stereotyping
Entrepreneurship is a magnet for stereotypes – from the labels used such as ‘mumprenuer’ to the questions women are asked when pitching. And there is plenty of evidence to show that these stereotypes do hold women back and knock their confidence. A 2021 report by The Cherie Blair Foundation for Women found that “gender stereotypes significantly shape women’s journeys to and through entrepreneurship by affecting their aspirations, sources of support, opportunities, access to resources, perceptions, and the wider entrepreneurial ecosystem.”
4.
Limited networks and access to mentors
Because there are fewer female founders, women are less likely than men to know other entrepreneurs or to have access to mentors, or professional support networks. This presents a challenge to women looking to learn from their peers. Good mentors and role models are important in helping aspiring entrepreneurs overcome some of the challenges they may be facing.
5.
Balancing home and work life
Combining family life and entrepreneurship isn’t easy. Women often still pick up the majority of caring responsibilities at home and during Covid it was reported that women took more than their fair share of the childcare.
Women can feel more under pressure than men to prove they can have it all, balancing personal and professional lives successfully which holds many women back.
Legal services for female founders
Ignition is the law firm for start-ups and scaling businesses. We have every step covered when it comes to providing legal services for start-ups and supporting early-stage entrepreneurs. Unusually for a law firm, 75% of our partners are female and we love championing female entrepreneurs.
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From incorporation to help build your visions & assist you in enabling your business to reach its potential.
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We provide corporate and commercial advice for start-ups including:
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Incorporation
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Support in securing funding and resources
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Assistance in negotiating fair and equal terms
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Expertise in navigating complex legal issues
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Many of our lawyers are founders of businesses themselves so they understand the challenges you face and can take a personalised approach to understanding and addressing the unique challenges faced by female entrepreneurs.
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We offer a supportive network to help guide you through and simplify things for you.
Our team of experienced lawyers are ready to help you whether you’re just starting out, scaling for growth or taking your business to another level.
For any further information please contact info@ignition.law
