Proportion of female-founded start-ups doubles in UK

While the number of UK female-founded start-ups has doubled over the last decade, a colossal funding gap means that male-founded businesses still outnumber them by nearly ten-to-one. According to research from Boston Consulting Group, when female-founded start-ups do receive investment, it is on almost one-third less than the amount received by their male-founded counterparts.

In a market increasingly favouring collaboration and customer-centred services, the long-standing dog-eat-dog attitudes of male-dominated business are being challenged by companies led by women. In spite of woman-led businesses seemingly tapping into global trends more tightly, however, they are still less likely to be awarded funding. According to research from EY, a stunning 52% of woman-led companies have no outside funding, while 70% of man led companies had access to external investment. 

Further highlighting how historical assumptions about business and gender seem to be leading investors to overlook major opportunities, a new study from Boston Consulting Group (BCG) has also highlighted a huge gap in funding in the UK’s start-up economy. Start-ups with mixed teams  perform the best in terms of receiving funding, with a 66% success rate, but male-only teams still boast a 57% success rate, compared to female-founded companies, which are nearly 16% less likely to receive funding. On top of this, when female-founded start-ups do receive investment, it is 30% less than male-founded start-ups receive.

When it comes to explaining this, there are a number of contributing factors which BCG points to. Primarily, however, it appears to relate to the persistent lack of gender diversity in funding groups. While the traditionally hyper-male world of venture capital (VC) is slowly progressing in this regard, 88% of senior leaders in leading UK venture capital firms are men, while 40% of these organisations have no female partners at all.

Additionally, BCG cites the Rose Review on the matter, which recently highlighted that typically a higher proportion of women start companies in sectors that are less capital-intensive, or require less funding rounds. 

Despite the apparent scarcity of funding for female-founded start-ups, however, women do not seem to have been put off from trying their luck in the sector. BCG also found that in the last decade, the proportion of female-only founded businesses has almost doubled in the UK. The percentage of start-ups being launched by female-only teams fell in 2010, hitting 5.2%, but this swiftly rebounded. A clear upward trend since then has left women accounting for 10.1% of UK start-ups in the most recent data available. 

Nadjia Yousif, Diversity & Inclusion lead for BCG in the UK, commented, “While it’s encouraging to see that the number of female founded start-ups has grown in the UK, the statistics paint a clear picture that more should still be done to ensure we remove any unfair biases in the selection or funding stages.”

“It’s interesting to note that while men lean towards all-male founding teams, mixed-gender teams are in fact 10% more likely to secure early-stage and series funding. This highlights the importance of ensuring leadership teams are representative, as it can help start-ups tap into additional funding, as well as unlock revenue potential.”