Untapped Unicorns: scaling up female entrepreneurship

The Entrepreneurs Network (TEN) established The Female Founders Forum with Barclays in early 2016. The Forum brings together some of the UK’s most successful female entrepreneurs, to address a specific problem informed by academic evidence: why too few women-led businesses reach the same economic scale as that achieved by male-led companies.

Their latest report, Untapped Unicorns: Scaling up Female Entrepreneurship, outlines recommendations to address this issue and Juliet Rogan, Head of High-Growth and Entrepreneurs at Barclays, explains its importance:

In recent years, I have noticed two important trends emerge in the field of entrepreneurship. The first is the surge in funding choices available to business owners. The second is the rise of female entrepreneurs across the UK.

A link between the two may at first appear elusive, aside from their both demonstrating the strength and dynamism of UK entrepreneurship. But this report shows that while we are seeing more and more women at the helm of successful businesses, they face greater difficulties scaling up than male-led ventures.

The facts speak for themselves: women-led businesses achieve far lower levels of funding, with male entrepreneurs 86% more likely to be VC funded and 56% more likely to secure angel investment. Female participation in business ownership is directly associated with higher credit rejection probability.

As Head of High Growth and Entrepreneurs coverage at Barclays, I hear first-hand from UK entrepreneurs the challenges of scaling up a business. This is not limited to access to finance: founders must hire and retain the right people, decide where to deploy funds, and know when the time is right for global expansion. This report highlights a challenge that is faced not just by female entrepreneurs but by the entrepreneurial community as a whole. Nonetheless, it shows that access to funding is still a specific and persistent barrier for too many women when starting and growing their business.

The discourse around investment is all too often dominated by the demand-side — how entrepreneurs should approach investors, crack the elevator pitch and secure the funding required to scale. What this project rightly highlights is investor selection: it is vital that entrepreneurs choose the right backers for their business. Such is their passion for their business and their determination to make it a success that many simply aim to secure funding from any source possible. The goal should be to secure the most compatible investor for your products and services: someone who believes in the company’s vision and accepts their level of involvement from the outset.

At Barclays, we are passionate about helping entrepreneurs to grow, and in the past eighteen months have placed particular emphasis on scale-ups. Last year we launched Scale-Up UK: Growing Businesses, Growing our Economy, a report from the business schools at the University of Cambridge and the University of Oxford.

“The facts speak for themselves: women-led businesses achieve far lower levels of funding.”

We launched our commitment to high-growth businesses to specifically support scale-ups and their founders, including a fund of £200m for venture debt, specialist relationship directors to support companies from start-up to scale-up to IPO, and a wide network offering unique opportunities to connect with our experts and wider client base to grow and realise their ambitions.

We are glad to have partnered with The Entrepreneurs Network to hear first-hand from some of this country’s most successful female entrepreneurs, and find practical solutions for tackling the scale-up gap. I commend this timely report, which is full of tangible, actionable recommendations. I hope policymakers, the media, the finance industry and others operating in and around the entrepreneurial sphere will give it the attention it deserves.

The 10 main calls to action

For the UK Government

1. Improved data collection: provide data on growth businesses to provide policymakers with stronger evidence on female entrepreneurship.

2. Tracking women’s progress: provide statistics on returns offered by women-founded businesses at the angel level to encourage an increase in early-stage investing.

3. Bridging the patenting gap: develop systems to better track and publicise women’s progress in patenting.

4. Inspiring the future: consider a more structured programme that is better promoted, and take action to get more schoolgirls studying STEM

For female entrepreneurs

5. Pay it forward: all female founders to take matters into their own hands and note that the barriers to entry are much smaller than is often thought.

6. Mentorship: encourage initiatives across the UK to ensure female entrepreneurs get the coaching they need to scale.

For the venture capital industry

7. Promote diversity: Research has shown15 that biases exist within the venture capital industry. Acknowledging these biases could break down barriers to female success when pitching to VCs.

8. Consider hiring successful female founders: the VC industry should consider adjusting the ratio of female:male employees.

For the media

9. Challenge stereotypes: cover women-led businesses — in particular those operating in male-dominated industries.

For accelerators, incubators and co-working spaces

10. Overcome biases: offer female entrepreneurs access to new networks, encourage cultivation of industry contacts, and cooperation between entrepreneurs operating in a similar field.

Download Untapped Unicorns: Scaling-up Female Entrepreneurship (PDF 8MB)