While improvement is positive, female entrepreneurs need their hands on the purse strings and a seat at the table to truly celebrate progress

Bayes’ female academics respond to the Rose Review, and analyse what needs to be done to give women entrepreneurs the same opportunities as men.

Female entrepreneurs need to be empowered to make more funding decisions and given more opportunities at every stage of the decision-making process, according to leading female academics at Bayes Business School (formerly Cass).

An independent review led by Alison Rose, chief executive of NatWest, this week found that, in 2022, women in the UK launched 151,603 companies, up from 145,271 in 2021 and more than twice the level in 2018.

This represented one in five of UK businesses, with the number of 16 to 25-year-old female company founders growing more than 20 times since 2018, as the Treasury-commissioned review targets an increase in the number of women launching businesses by half by 2030.

However, Dr Sonia Falconieri, Dr Janina Steinmetz and Dr Nettra Pan believe this is the tip of the iceberg in achieving parity.

Venture capitalists must stop gender bias towards female founders

Dr Sonia Falconieri has written about the need to increase gender diversity in the world of corporate finance, in particular on boards. Progress is being made – with the number of female representations on boards increasing from 10 per cent across Europe in 2010 to 33 per cent in the UK today – but she says more must be done.

“Progress is encouraging but a) female-founded ventures remain substantially less than male-founded ones, and b) what is their likelihood of survival? The report does not speak to this.

“The lack of diversity among those making funding decisions remains an obstacle but so are persisting gender biases towards female founders, as recent research shows. VCs ask fundamentally different questions to male and female founders: while men are asked about their potential for gains, women are asked about their potential for losses. This affects the funding they receive.”

Policymakers must do more to stop women being penalised for being mothers

Dr Janina Steinmetz is the Director of Bayes’ Global Women’s Leadership Programme – which inspires, equips and connects women who are leaders or aim to become leaders. She said business schools are working to bridge the gap to becoming more gender aware and are “helping women to develop the skills and network needed to be entrepreneurial and, crucially, to achieve sustained success”.

Dr Steinmetz’s research has explored how gender and professional stereotypes can interact when people form impressions about men and women. She labelled the review’s findings "a first step" and not a measuring stick, highlighting the role policymakers can play.

“We shouldn’t take isolated findings as indication that we’ve done enough for gender equality. There are many areas where women face obstacles, and we need to address all of these. 

“As well as removing bias in VC funding, women need support from public policy. We know from research on justifying gender discrimination in the workplace and overcoming maternity bias at work that having children is a crucial point in a woman’s career. Doing so should not impact their opportunities to be successful or rule them out of positions at the top of organisations. To support female careers, public policy must do more to support parents."

How to break through the malaise – it depends on the company

The review, first conducted in 2019, found that £250 billion could be added to the UK economy if women matched men in starting and scaling up businesses.

Dr Nettra Pan, a Lecturer in Entrepreneurship, says that while the news that more women are starting companies in the UK should be celebrated, it only offers a partial picture. More data is needed on the percentage of these companies that survive, receive funding and scale. Only then can we truly gauge how effective the UK has been in knocking down the barriers to entrepreneurship typically faced by women. She added that there are also key differences between starting small businesses and starting the kind of high-growth, scalable businesses that attract funding from VCs.

“It would be interesting to understand the types of companies’ women are starting, developing, and scaling, and who they are attracting investment from. Specific kinds of high-growth companies are the kinds that could bring in larger returns for the few female founders of high-growth companies, but also have an impact in the economy through contribution to GDP and job growth. Women receive a very small percentage of VC money although, after VC financing, women and men are equally likely to achieve exit outcomes, either through IPOs or acquisitions."

Dr Pan’s research on identity and VC decision-making explains that women and other minority identities are less likely to receive VC funding due to biases that exist along the decision-making pipeline.

At the moment, very few VCs comprehensively understand their own process. Until VCs can determine ways to eliminate the harmful biases in their investment screening process, female founders will have to continue to be creative in how they obtain funding and position themselves.

“There is some good news, however. New research shows that investors are not prejudiced against women but rather have different gender role expectations. In this space, female founders of ventures targeting social and environmental goals may have an advantage. Social venture characteristics are perceived as more attractive by investors, and female founders have specific business advantages in this context as their reference to social impact goals exude warmth and compensate for female entrepreneurs’ gender role incongruity.”

All quotes can be attributed to Dr Sonia Falconieri, Dr Janina Steinmetz and Dr Nettra Pan, at Bayes Business School.


Notes to editors

  1. In 2016 in the USA, VCs invested $58.2 billion in companies with all-male founders while women receiving just $1.46 billion in VC money.
  2. Total Entrepreneurial Activity around the world by region and gender shows that the four countries where women exceed men in terms of founding new businesses include Togo, Indonesia, Qatar, and Poland. Two of these countries are in developing countries, where entrepreneurship may be pursued due to lack of other avenues of employment, including potentially the types of employment that women would only be able to access if equal opportunities existed in those application processes (not counting the certification or education that may also be expected; areas women may also face barriers to access).

Featured Bayes Experts