Female-led start-ups are facing a serious lack of funding. Studies show that women-led businesses get only a small part of the total venture capital money available. This hurts innovation and economic growth driven by women entrepreneurs.
Several things contribute to this funding gap. Gender biases and not enough women in decision-making roles at venture capital firms are main reasons. Female entrepreneurs also miss out on social networks and mentorship that male entrepreneurs have access to.
Organizations and advocacy groups are working to fix these issues. They support female entrepreneurs through mentorship, networking, and targeted investment funds. But progress is slow.
Advocates say the whole venture capital system needs to change to make sure resources and support are given out fairly to female entrepreneurs. “Innovation does not depend on gender. We must make sure women entrepreneurs have equal chances to succeed,” said Emma White, a venture capitalist who supports diverse founders.
As the discussion about gender equality in entrepreneurship goes on, everyone involved needs to take real action to close the funding gap for female-led start-ups. Ruby Sheldon started her toy company, Putty Pals, on her kitchen table. She now sells over £1 million worth of her sensory putty, made at her factory in Barnsley.
But getting the money to help her business grow was not easy at all.
Gender bias in venture capital
Sheldon came up with the idea for a less messy sensory putty after running slime parties for kids through her first company, Slime Party UK.
In early 2022, she invented and launched the sensory putty. A year later, Sheldon asked her local authority business support team for help to scale her business. Even though her product was becoming more popular, getting funding was a big challenge.
Sheldon’s experience shows how hard it can be for many women entrepreneurs to get financial support for their businesses. Business founders, investors, and advisers from across Scotland came together at the latest “No Diversity, No Deal” event in Glasgow. The event, hosted by wealth management firm Evelyn Partners and executive search firm Livingston James, was about making the scale-up process clearer for female entrepreneurs.
This event focused on a key challenge for women who start and run their own businesses: gaining confidence in fundraising and looking at other ways to grow. Alison Fitzsimons from Evelyn Partners said, “We know that getting funding is not easy for all entrepreneurs, but especially for female founders: less than 2% of VC funding, and only 3% of equity capital in the UK, goes to women-led businesses. Can we as a business community in Scotland do more to support those women who want to raise funds, and also those who may have decided this is not the right path for them?”
One participant shared her recent experience after getting equity funding for the business she co-founded with her husband.
Even though they succeeded, various press outlets left her out of the photograph and only used a quote from her husband when covering the story. Allan Cannon, co-founder and CEO of space technology scale-up Krucial, said, “What an incredible group of people, all passionate about solving this gender gap in the funding system. As the father of a young girl, I’d love to see a more fair funding landscape by the time she is an adult.”
Sophie Randles of Livingston James said, “There is power in creating a forum like this, where business influencers and advisors can come together to not only learn but to be held accountable for driving positive actions for women in business, especially those setting up and growing businesses.”
No Diversity, No Deal was founded by Alison Fitzsimons, Sophie Randles, and Jane Stewart to inspire female business founders and leaders and encourage more women to take on the challenges of entrepreneurship.
The series is also supported by KPMG in Scotland. Ms. Fitzsimons added, “We try to answer questions by creating a supportive community at No Diversity, No Deal, where entrepreneurs can share their experiences in an environment that sparks innovation, growth, and diversity of thought.”
Photo by; Emil Kalibradov on Unsplash
