Research has revealed the barriers still facing female entrepreneurs.
This comes as the government has pledged to support female entrepreneurs by working with the Women's Task Force to increase equity funding for women-led businesses.
Under the plans, equity funding for women-led firms is set to rise from 2% to 10% by 2030, reflecting a wider commitment to backing women in business as a driver of economic growth.
The research, from the business finance experts at money.co.uk business loans analysed Global Fortune 500 data to reveal that women-led companies earn around £4.3 million more each year than male-led businesses.
Despite this, women in business often face greater difficulty than their male counterparts in securing funding for their enterprises.
Barriers faced by female entrepreneurs:
According to the Gender Index, there are significantly fewer female-led companies that are ‘fast-growing’ in revenue, earnings, or market share in the UK, at just 1,603 compared to 11,151 led by men.
The research shows that unequal funding opportunities play a big part in this, with male-led companies most commonly funded by private equity. This type of funding offers benefits often including a bigger cash injection, flexibility in what the funds are used for, and enhanced credibility through having a well-known investor involved in the business.
According to the same Gender Index report, last year, out of 468 businesses that received private equity funding, only 3.63% were female-led companies, compared to 90% that were led solely by men.
Whereas, female-led companies are most commonly funded through angel investors (5.44%), who are high-net-worth individuals investing their own money.
While these investors can be a valuable source of funding, they typically have access to much less capital than bigger, private equity firms, making it more difficult to scale quickly.
Beyond funding inequality, like women across the workforce, many female entrepreneurs also shoulder greater childcare responsibilities, which can limit the time and resources available to grow their businesses.
Research shows that one in four mothers (26%) reduce their working hours due to childcare compared to just one in 12 fathers (8%).
Nearly two-fifths (39%) of women work part-time, compared to just one in six (15%) men.
Joe Phelan, Small Business Expert at money.co.uk business loans, comments:
“Female entrepreneurs have significantly impacted the UK economy, as seen in the impressive revenue generated by female-led companies. However, it’s no secret that being a woman in business can come with barriers, whether it’s struggling to access capital, a lack of mentorship and networking opportunities, gender stereotypes, or work-life balance challenges.
“To enable female entrepreneurs to flourish further, progress still needs to be made regarding equal opportunities. Business leaders can contribute to this by creating more mentorship and networking opportunities for female entrepreneurs, where women in business can share their knowledge and experiences to further their development. Financial service providers must also ensure they create equal access to funding opportunities through grants, loans, or investment capital.
“By creating equal opportunities like these, as well as highlighting female role models in the workplace, businesses can foster a more inclusive environment and pave the way for more female entrepreneurs to reach their full potential.”
