Industry Insights

Could a lack of female investors affect the UK's startup ecosystem?

At the start of the month I published a piece that talked all about female, angel and northern investors. I'm immensely passionate about all three of these areas, and it's brilliant to have the platform to open up the discussions I feel we need to be having more of.

One of the reasons I published the piece was as a female investor in the north, I'm seeing more and more of the issues we're facing as a whole - and what may happen if we remain unchanged.

Like many sectors, areas of financial services and technology-based industries have traditionally been male-dominated. Particularly when looking at the more specific venture capital and investment landscapes, both female investors and female entrepreneurs are under-represented and it's widely felt that both present and future generations believe - consciously or subconsciously - that investment is just for men.

Almost two million investment-minded women want to invest, but are so often put off by the underlying inequality that exists in this area. A key finding from the recent report commissioned by EISA is that on average, women in the UK have in the region of £24,800 in investable assets and savings beyond that of property and pensions, translating to £375bn nationally.

Yet research has traditionally shown women aren’t investing money anywhere. They are holding funds in cash (and sometimes property), but very few are investing in stocks and shares - despite women being responsible for owning over 45% of the UK’s wealth, only 14% of angel investors in the UK are women.

But when a female VC backs a female-led startup, it's 21% more likely to succeed.

Why are more women not investing and supporting UK early stage businesses?

There’s no secret there’s a lack of women investors coming through, and if female-led businesses - or female-focused businesses - aren’t getting funding, we’re missing out on some potentially great businesses.

The lack of female investors make it difficult for projects led by or aimed at women to obtain financing. Traditionally female entrepreneurs have often taken a step back when looking for venture capital if faced by a panel of male investors. We can all draw our own conclusions as to why this may be, but it's a common understanding.

As an investor myself, I feel it's important that female angel investors - those who can provide capital and experience for new ventures - play a critical role in a startup ecosystem. After founders have been invested into by family and friends, angels are often the next step.

Read more: 5 investing insights from a female angel investor

I'm keen to encourage more females to become angel investors and invest, and hopefully this will power through so we see more female entrepreneurs across alternative sectors. Getting more women to become investors in early-stage startups will help increase the number of female leaders in male dominated sectors, and I am passionate about empowering wealth-creating women and championing a new way of investing that doesn’t compromise a female’s values.

Diversity in any investment capacity is key

We need a diverse investor base to really fulfil angel investing objectives, so to bring both finance and expertise to early stage and growing businesses. We need at least a 40% increase in numbers to satisfy this need, and I truly believe this disparity goes back to education in the STEM-focused subjects (Science, Technology, Engineering and Maths) that were so often aimed at males. These subjects have been a typical route to the finance sector.

Our mission now is to change these traditional approaches and enhance the mindset of today’s female investors and female entrepreneurs. Women leaders bring a different dynamic to the leadership scene.

Very broadly speaking, women can be more people-oriented. I really can't speak for everyone, but I personally believe that’s what differentiates us as a gender. My experience suggests men’s leadership styles are more hierarchical, and I've seen the most fantastic collaborative working through the creative industries, with men who have built amazing teams and brought great women in alongside them.

Motivating women to invest

When it comes to investing, women today want more than just good financial returns - they also want their money to be invested in a way that matches their values and ideals. Not only are women becoming more economically significant and controlling an even greater percentage of the world’s wealth, but they are also becoming increasingly concerned about the social and environmental impact of their investments.

Increasing numbers of professional women want to make investment decisions that positively influence the world we live in; making impact driven investment choices. They do this by investing money into companies and industries benefiting not only themselves with returns, but benefiting a wider group by creating positive social and environmental change.

Read more: investing for growth or impact? Invest for both

And one of the biggest challenges often faced by female investors has been to make one’s voice and capacity clear in terms of the significant contribution that can be made. Women bring different talents and insights, and importantly, empathy for those women who have faced the same struggles as they have.

Because the financial services sector has been an area that is largely male-dominated, with a set culture and knowledge around it, us women need to enable our individual identity and personality to come through in whatever we are doing.

When you are from an area that has had such a strong ethos around it, our biggest challenge has been how to create a clear opportunity for women to break through.

However, this space is changing and women are starting to come through in financial services, especially in more entrepreneurial areas like fintech - but there is also more to do to enable more women to get into leading positions on boards.

Whether this will have - or is having - a direct impact on the UK's startup ecosystem is an on-going discussion point, but I can't help feel if more women aren't encouraged and inspired to get involved investing and supporting businesses, the ecosystem won't see the same level of success as it possibly could.

Driving Growth.
Creating Value.
Delivering Impact.

Backed by

Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.