The key to empowering female entrepreneurs in the UK? Funding

The CEO of a revolutionary safety harness explores the reason women launch fewer startups
Ali Skidmore
Ali Skidmore

The theme for this year’s International Women’s Day, "Inspire Inclusion," highlights the need to address glaring disparities in funding for female entrepreneurs in the UK.

For all the talk of equality in the modern workplace, latest figures suggest that just 2p in every £1 invested in early-stage UK business goes to female-founded businesses, compared to 85p in every £1 for male-founded businesses. Just think about that for a moment. On a purely statistical level, businesses founded men are nearly 43 times as likely to secure investment than their female-founded counterparts. Are men 43 times more likely to have a good idea or spot a gap in the market? Clearly not. So what is going on?

Investors typically invest in people like themselves and in markets they understand. If we’re to diversify the kinds of business that secure investment and truly innovate, we need to diversify the pool of investors who can support these early-stage businesses.

Female venture capitalists are twice as likely to support female-led start-ups than male venture capitalists but, with far fewer female investors than males and recent changes to government regulations exacerbating the situation, the odds aren’t great.

Why is this?

Put simply, changes to investment rules on 31 January meant individuals needed an annual income exceeding £170k to become an Angel investor. This is a whopping 70% increase from £100k and means that only the top 1% of UK earners are now eligible - an exclusive club with fewer than 20% female members! As the next investment call after the banks for most early-stage businesses, reducing the number of women who qualify to become Angel investors has serious knock-on implications for investment in female-founded businesses.

For example, EaseTwist was inspired by my daily battles with the straps on my children’s buggies and car seats. Fiddly and awkward to line up and tension correctly, it could take an age to get the children safely strapped in before heading out. There had to be an easier way.

Our solution - a patented safety buckle that can be clipped, correctly tensioned or unclipped in a single twist - has been well received by the baby products market, emergency and rescue services, automotive and leisure manufacturers too. They all recognise the benefits it provides and want to place orders. But they can’t until we have manufacturing capabilities in place. And the banks won’t invest in those facilities without customer orders in place.

It’s a Catch 22 situation and precisely the kind of challenge where Angel investors could help.

Start-up grants are another option but, at this level of investment, almost all have significant match-funding requirements. The gender pay gap means women have significantly lower savings than men so, again, accessing cash becomes more difficult for female founders. Add a young family to the mix and you’re even less likely to gamble assets, such as the family mortgage, on getting your idea off the ground.

As I write this column, the Chancellor has announced Budget plans to row back on the Angel investor income changes but damage has already been done.

I’ve been fortunate to receive tremendous support from technology accelerator BetaDen in our journey but, while their experts can signpost us to funding providers, they can’t change the structures that entrench unconscious gender bias.

If we’re serious about Inspiring Inclusion, governments, financial institutions and investors need to re-evaluate traditional investment models and encourage greater diversity. Breaking down barriers is not just a women's issue, it’s a societal imperative that will pave the way for a more vibrant, inclusive future for all.

Written by
Ali Skidmore