A slew of new initiatives is addressing the fact that despite being more successful, fewer businesses are led by women
Three out of five new enterprises are led by men, according to research from Forward Partners, the VC firm. Fortunately this may be about to change. A number of new initiatives are tackling the structural problems preventing women from realising their entrepreneurial potential by offering them support, opportunities to raise money and chances to network with the movers and shakers of the UK startup scene.
And these initiatives haven’t come a moment too soon. According to research from YouGov and Facebook, there are 2.5 million women in Britain who would like to launch their own businesses. The study also calculated that if the women waiting in the wings were enabled to realise their ideas, this would add £10.1bn to the UK economy by 2020. While 25% of the 2,232 women polled weren’t confident enough to get their dreams off the ground, the main obstacle holding budding female entrepreneurs back was a lack of role models, with 72% being unable to identify a single female business leader running an enterprise like the ones they wanted to set up. “You can’t be what you can’t see,” says Lu Li, founder and CEO of Blooming Founders, the network that champions female entrepreneurs and freelancers.
That’s why a lot of these new initiatives ensure that they can not only point out female role models but also offer aspiring entrepreneurs the chance to connect and learn from them either via workshops or meet-and-greets, an opportunity that wasn’t around a few years ago. “Obviously, there were networking groups out there before but up until recently they were very traditional, stiff and old-fashioned,” says Li. “The women you met there had probably been running their businesses for 20 or 30 years and that’s not what you want when you’re talking about startups.”
While male entrepreneurs have long enjoyed the ability to rub shoulders with relevant role models and peers, the absence of similar support for women has meant that many potential female founders have been put off trying to launch a company. “It’s really challenging when you don’t have the knowledge, the connections, the experience or the people who can offer the support that you need,” Li says. Creating communities is therefore pivotal for the initiatives aiming to invigorate female entrepreneurship in the UK.
However these enterprises don’t just offer women the chance to source vital insights from likeminded individuals but they can also prove beneficial in regards to funding. And that’s essential to successfully boost the gender equality of the startup scene, as 34% of women in the YouGov and Facebook survey said that difficulties raising capital were holding them back from launching and scaling a new business.
This can be partly attributed to the fact that the VC ecosystem – just like the startup landscape – is not exactly gender equal. “Diversity is a really big problem among investors,” says Joel Hughes, UK design, technology and hardware manager at Indiegogo, the crowdsourcing platform. “Most of them are men with similar backgrounds and therefore tend to be less receptive to female entrepreneurs and their projects.”
However, it would be erroneous to assume that this is down to any conscious discrimination on the part of VCs. “It’s due to unconscious bias,” says Karen Cahn, founder and CEO at VProud Labs, the video company, and iFundWomen, the crowdsourcing platform for female entrepreneurs. “When a tribe of white guys controls all the money, they unconsciously tend to favour and fund people that look like them.”
Crowdsourcing has often been hailed as a solution to investor bias. However, Cahn quickly shatters that illusion. “It’s a myth that you only need to put up a really cool video and these magical crowdfunding elves will simply give you money,” she says. “The reality is that it all comes down to the creators’ tribes.” The people investing in a campaign are usually people who’re acquainted with the entrepreneurs’ families and friends, including professionals on the startup scene. Again, it’s not who you are but who you know.
Given the benefits creating networks can have for female entrepreneurs’ chances to successfully launch and scale their business, it’s rather obvious why initiatives aiming to support women have put creating communities front and centre. But while they have successfully begun to invigorate female founders, these enterprises still struggle to be taken seriously. “People think that I’m running a non-profit or a charity,” says Li. “People don’t seem to associate giving support for female entrepreneurs with it being a business opportunity.”
The fact that these initiatives are profit-making machines is important because it demonstrates that investing in female entrepreneurship is simply good business. “The way you make a difference is through business growth and that really means having a positive and testable bottom line,” says Anna Jones, CEO of Hearst Magazines, the publisher, and co-founder of Allbright, the funding and support platform for female-led businesses. In other words, in order to encourage VCs and entrepreneurs alike to bet on female-led startups, these new initiatives must prove that investors aren’t just making deposits into their karma accounts but their banks as well. “That’s what this is about, not handing out money to charity,” adds Jones.
And it shouldn’t be a hard sell for investors: according to Kleinwort Benson, the private banking and wealth-management firm, only 11% of female-led startups fail compared to 17% of male-led ones. Now, thanks to initiatives highlighting the success of women in business, this fact is finally starting to sink in. This was something that became apparent for Jones when she was using her own network of investors and business leaders to support Allbright. “There are just as many men as women who are recognising what a great investment this is,” says Jones. “And most of them are saying yes because it’s something that they’d thought of doing themselves.”
Does this mean that 2017 will finally be the year the UK’s startup scene become equal? Probably not. “But these initiatives mean that more female-led startups will get funding so that maybe in a decade or two we won’t need them anymore,” says Li. “We’re part of a movement that gets stuff done and creates practical case studies that show what an incredibly under-tapped resource women are in terms of skill and experience.”
In light of this, it’s hardly surprising that the women behind these initiatives have a positive outlook for the future. “This is going to be an unusually positive moment for the UK and for being a female entrepreneur,” concludes Jones. “We’ve only just started.”