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A new report shows that women-led companies, though increasing, get significantly less investment than male-led ones, particularly from venture capital and private equity.
Just 11.9% of investment in business goes to female-led businesses in the UK, with venture capital and private equity investment hugely skewed towards men, according to a new report.
The Gender Index, based on data generated by the analytics company mnAI, says that female-led companies make up 16.8% of companies, three and a half times smaller than male-led companies. However in 2021, 20% of newly incorporated companies were female-led.
Its analysis shows 66.1% went to male-led companies whereas female-led companies obtained nearly six times less investments (11.9%) than male-led companies.
For female-led companies, the majority of identified investments were made by angel investors, with the UK average at 83.8%. Just under a third of angel investors in the UK are female. The top three sectors for female angel investment were: professional, scientific and technical services; information, communication and technology; and real estate
Investment by venture capital and private equity made up a very small percentage of investments in female-led companies – less than 1% of investment in any one region while the UK average was 0.5% for the former and 0.1% for the latter.
The report also found that the under-representation of female-led companies is more pronounced when it comes to high growth companies.
In addition, it found that there is no conclusive correlation between the size of a company and its leadership, although female leadership does tend to decrease as the size of a company increases. The regions with the highest percentage of high growth female-led companies are Wales and Scotland, both at 12%.
The highest proportion of male-led high growth companies are medium-sized organisations while the lowest are small companies. By contrast, female-led high growth companies are most frequent in small companies and least frequent in medium-sized companies, although the numbers are very much smaller than for male-led companies. The North East has the lowest percentage of female-led high-growth businesses.
The data also found that:
Jill Pay, chair of The Gender Index, said: “Mapping the impact that female-founded companies have on the UK economy, uncovering their potential and supporting their growth, is paramount to a more inclusive, diverse and stronger economy…Our ambition is to ensure that greater support is provided to female-founded companies, helping to accelerate and stimulate fiscal and corporate growth.”