Women financing women

On the face of it, things look (relatively) good for female entrepreneurs and business women in the UK. Record numbers of women describe themselves as business owners[1], patent applications from female inventors have increased[2] and there are more women on boards (including at financial companies) than ever before (I write more about this here). There are plenty of signs of progress. 

But there is also much evidence that it takes something special for female founders to secure funding, or for women to make it to the top of a big corporation – and to stay there. The circumstances around Sacha Romanovitch’s impending departure as the sole female CEO at a big UK accounting firm remind us just how harsh a reality it is, and how lonely it can still be, for women at the top. And no matter how many more women are describing themselves as entrepreneurs, we are not seeing the belief from others. Last year, out of almost ￡10bn of capital invested in UK start-ups (almost double the 2016 total), less than ￡1bn went to female-founded companies (actually a slight drop from the year before). [3]

It’s hardly a surprise, therefore, that 23 out of this year’s LinkedIn top 25 start-ups were founded by men.

On a rational level, it makes little sense that women are missing out when it comes to funding their new business ideas. The Women’s Business Council cited a study from RBS that suggests tapping into female entrepreneurship could result in an extra ￡60bn for the UK economy[4]. And a report released in June by Boston Consulting Group (based on US companies) showed that businesses founded by women ‘ultimately deliver higher revenue – more than twice as much per dollar invested – than those founded by men’[5]. We need to take a serious look at the barriers to entry for would-be female entrepreneurs. 

Some of the evidence is so blatant it is cringe worthy - I’m almost embarrassed to share it. A recent poll conducted for the Telegraph’s Women Mean Business campaign revealed that 65 per cent of women said they had been ‘unfairly treated by financial services when trying to raise funding’, ‘72 per cent had used their own credit cards, cash and savings to fund their businesses’ and 41 per cent of the women ‘didn’t feel they were on an equal footing with men’[6]. The lack of funding actually provided confirms the accuracy of these perceptions – and shows the problems are widespread. It’s not an exaggeration to suggest there’s a crisis of funding when it comes to female-led enterprise. 

I think the explanation is almost painfully simple. Just 13% of the decision-makers in UK venture capital are women[7], creating something of an inbuilt barrier for female entrepreneurs. We women are very different from each other, but we can often understand where we’re coming from, and will fight each other’s corner (quite contrary to all the suggestions that women tend not to support each other. These days it’s obvious that there’s room for lots of us to succeed).

I met a woman recently who told me she was going to ‘appoint a man to my team just to present to investors’ for her second round of funding,’ having realised the story about her business just wasn’t getting through. She really didn’t speak the right language or have the right tone of voice. As I said, I’m almost embarrassed to share such blatant feedback from an industry I work in and champion – but it rings true. 

Although I’m a great believer in men helping us to achieve better gender balance when it comes to shaking the financing tree, I’ve realised women need to help each other – at least for now. To break the impasse we need women to stand up and support one another. We need men to be involved too, but at present we need to turn our attention to our fellow women. Last week I enjoyed being ‘in conversation with’ Vestpod’s Emilie Bellet as part of her latest interview series. The breakfast was attended by a big and wonderful group of inspiring women with varying interests across the spectrum of business and finance. When we went to Q&A, most of the questions were from entrepreneurs who, unsurprisingly, were concerned about a) building businesses that serve women’s needs and b), how they could secure more funding and find other women who were interested and had the wherewithal to fund new ventures. There was a fantastic, invigorating atmosphere, characterised by mutual interest. And there were a lot of very strong, credible businesses crying out for, and worthy of, funding.  

I think the solution lies in us coming together – again, at least for now – to create more pools of funding from women, for women. We just need to ‘beat them in the market’, to show that women have great new business ideas that other women can back, and benefit from backing. I’m convinced that if we can do that, more established venture capitalists will come running. Dyed-in-the-wool financiers are starting to recognise they may be missing out on lucrative opportunities because they are not ‘up with the times’ or able to see past a presentation style that may not quite fit with what they are used to.

I took part in Cosmopolitan magazine’s ‘Self Made’ summit earlier this year and I can see how difficult it might be for traditional firms to ‘get’, say, the latest new customised handbag idea – even though I thought it was brilliant. Or the new jeans concept. Women are often coming up with ideas to fill gaps based on their own experiences – which may not resonate or even make any sense to men. 

Venture capital – and then private equity – is tough business. In a way we can all understand how it’s hard for existing, successful players to keep shape-changing along with those who present their business cases. Let’s not try too hard to convince them. Instead let’s see what we can do ourselves. 

Whether through great organisations like the Step Up Club or SheEO, committed to supporting women in their careers and as business owners, or through sharing ideas through our own individual networks and expanding those, let's show that women are on each other’s side (as long as they have great ideas and a compelling business plan – this is not a free for all). If we come together as a community, instead of fighting to be heard, we can hear each other, back each other– and make good returns in the process!

We could even think about committing a proportion of money we may have (or may earn in future) – a new tithe, perhaps. At Legal & General, we’ve just sponsored Girlguiding’s My Future Business competition, which is our commitment to the next generation of female entrepreneurs. We’re keen to encourage young women to work on their business ideas today and become more financially confident now, so they can build the skills they need to be successful business owners in the future.

But whatever you do, or positive difference you seek to make, one thing is certain – the time for talk is over. We need to put everything we have into bolstering women in business and going further for female-owned enterprise.

[1] Surge in female entrepreneurs narrows UK gender gap. https://www.ft.com/content/6b27babc-607a-11e7-91a7-502f7ee26895

[2] Women listed as inventors in third of global patent filings. https://phys.org/news/2018-04-women-inventors-global-patent.html

[3] Funding for female entrepreneurs in the UK takes a tumble. https://www.forbes.com/sites/davidprosser/2018/03/20/funding-for-female-entrepreneurs-in-the-uk-takes-a-tumble/

[4] Sisters doing it for themselves: the state of UK female-led business. https://beccic.co.uk/uk-female-led-business/

[5] Why women owned start-ups are a better bet. https://www.bcg.com/en-gb/publications/2018/why-women-owned-startups-are-better-bet.aspx

[6] Two thirds of British female business owners say they are still not taken seriously by investors. https://www.telegraph.co.uk/women/business/two-thirds-british-female-business-owners-say-still-not-taken/

[7] BVCA Women in UK Venture Capital 2017. https://www.bvca.co.uk/Portals/0/Documents/Research/2017%20Reports/Women-in-UK-Venture-Capital-2017.pdf