While running your own start-up or business could be a big dream for many women, gender inequality and the patriarchy can often get in the way of making it a success. This begins with issues getting investment. Beauhurst data reveals only 3.5% of equity investment for H1 2023 went to female-led businesses, compared to 85% going to male-led firms.

Financial experts and politicians are lobbying for change, with Caroline Noakes MP commenting that “more work is required if we’re to maximise the entrepreneurial potential of women in Britain”. It’s beyond time for change, especially as a record number of women became entrepreneurs in 2022 and female-led businesses represent 20% of all UK firms.

But the problems that women face in this space are numerous and multi-faceted. Let’s begin with investor bias – due to the fact that the majority of investors are male. A study found that in 2022 only 5% of investment teams consisted of more than 40% women, while 60% were three-quarters or more male. This inequality leads to a lot of networking and investment opportunities being kept within a small circle that women may find more difficult to penetrate.

“Men feel more connected to other men who look like them vs women. So networking connections are [more likely] to be made between men,” investment specialist and fintech entrepreneur Ayesha Ofori explains. “Women have to work harder to have the same level of connectedness.” This can also impact people outside of certain backgrounds and demographics, like age, social class, sexuality and religion – but gender can be a pervasive setback for entrepreneurs trying to acquire investment.

The normalisation of masculine, and sometimes toxic, behavioural norms can also put women at a disadvantage. “Women typically are less likely to shout about themselves and their ideas or potential, meaning that louder – often male – voices get heard in networking scenarios and around conversation tables with investors,” finance coach Ellie Austin Williams says.

Complications may come at pitch stage, due to the added doubts towards female candidates – Ayesha reports that women are more likely to be asked more difficult questions, meaning it’s harder for them to get a successful outcome and get funding.

“There needs to be more women in decision making positions at investment companies if things are going to change,” Ayesha adds. Without shifting the male domination at the top and the subsequent culture change that could come from that, closing the gender funding gap will be much more difficult.

There are many cultural assumptions and misconceptions that feed into the gender funding gap, from the presumption that women aren’t as good with numbers as men (internalised by both men and women, causing both genders to doubt female abilities) to the normalised attitude that childcare is solely a woman’s responsibility and will affect her ability to effectively run a business and subsequently make money.

Harmful stereotypes around motherhood

Many damaging assumptions surround childcare and motherhood contribute to the gender funding gap, including the attitude that motherhood will distract women or lead them to put less into a business – making them less worthy of investment. “As a mum of two young children I've found that it’s actually helped. I’m way more efficient with my time, super focused and more organised. I’ve had to be…” Ayesha says. “It’s the only way to be able to do it all.”

According to co-founder of childcare booking app Bubble Sarah Hesz, “childcare is part of the invisible infrastructure that is vital for every business to thrive, but for many founders it presents a huge barrier – financially, emotionally and logistically… forcing female founders to make very tough career choices.” 

Justine Roberts CBE, CEO and founder of Mumsnet, has weighed in on the importance of reducing childcare costs going forward. “In the next five years I’d like to see a massive improvement in the UK’s childcare system so that entrepreneurs who are also mums aren’t forced out of work by the expense of childcare,” she said.

It’s also important that patriarchal ingrained attitudes are challenged to close the gender funding gap. To begin, Ayesha says it's crucial that we “challenge stereotypes about women's primary roles as caregivers and encourage shared parenting responsibilities”, with certain policies making all the difference: “implementing generous parental leave policies [will] support both mothers and fathers will help foster a culture of shared responsibility.”

Business and financial consultant Aisha Ejaz points out that changes also need to be made at government level. "This doesn’t only require money to be thrown at it but a creative strategy needs to be developed at government level to help female founders with children raise the required funds successfully to close the gender funding gap,” she says. This creative policy-making at government level will kickstart societal attitudes and embed new norms, adding that workplaces could provide “onsite childcare facilities so that female founders can build investable businesses.”

“Creativity is key here which has been sorely lacking to date,” Aisha says.

Investing in businesses led by women is a sound business decision

Pushing for these changes won’t just benefit female entrepreneurs – the positive impact potential is much wider. Research in the US found that startups with at least one female founder outperform all-male-founded teams by 63% and female founders deliver more than two times as much per dollar invested than male-owned companies, on an unequal playing field.

The UK economy could stand to benefit too. Caroline Notes MP – who is also chair of the Women and Equalities Committee – has stated that “the Treasury itself estimates that up to £250 billion of new value could be added to the British economy if women in the UK started and scaled new businesses at the same rate as men do.” Closing the gender funding gap, therefore, would have a wider positive impact for the whole of society.  

A need for women on the other side of the table and mentorship for male investors

Caroline adds that it’s important that women are incentivised to become investors, and that more resources are put into entrepreneurship education. Ayesha agrees, adding that we also need better education around financial literacy and money in general, so that women can better imagine taking the step into running a business in the first place. Support groups, schemes and grassroots funding are also integral in encouraging women to make the jump and feel confident.

Mentorship is also suggested as a means of closing the gender funding gap – with Ellie suggesting that “you can’t be what you can’t see – it’s a critical part of changing the outcomes and showing females that it is possible to be entrepreneurs”. While Ayesha insists that male investors and VCs would benefit the most from mentoring “so they can be closer to the lived experiences of female founders. Maybe then they’d be able to actively overcome some of their inherent biases.” 

After all, if the investment space is currently male-dominated, we need men to help change that narrative and help close the gap. “We undoubtedly need male allies – both other founders and investors – to get on board and push for a more inclusive space,” Ellie says.

Perhaps, then, the key to closing the gender funding gap – and what will help most to bring new policies and attitudes – is an improved understanding of female entrepreneurs’ experiences and how they hinder investment and growth. “VCs and male investors need to better understand the struggles we face because of cultural misconceptions and inequalities,” Ayesha says. 

“After all, if they can't see the problem, how are they going to fix it?”

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