A Staggering Two Thirds Of Female Founders Say Investors Don't Take Them Seriously
A Telegraph survey of 750 female founders, published for International Women’s Day, found that a shocking two thirds of female business owners say they’re not taken seriously by investors and banks when trying to secure funding for their start-up.
In the survey, 65% of respondents reported they’d been unfairly treated by financial services when trying to raise funding, while 67% said they’ been treated differently because of their gender. This bears out the finding in last year’s Allbright Collective Annual Survey.
This means 72% of female founders have had to fund their enterprise out of their own pockets, using their credit cards, cash and savings, effectively bootstrapping their business.
Remember the story I wrote about how Chrissie Rucker, founder of The White Company, started her business with a £6,000 legacy and small government grant? Chrissie ran out of cash after the first week but thankfully fortune struck when she won £5,000 in a business competition and the Financial Times picked up her story.
How Liz Earle started her company with a friend, working from the kitchen table and sending out a mail order catalogue to family and friends in their network, building their business referral by referral.
And how founder of The Body Shop, Anita Roddick, started her business with a loan for £4,000, arranged by her husband Gordon because Anita, dressed in a Bob Dylan T-shirt, had perhaps not unsurprisingly failed to convince the bank of her business plan.
The findings in The Telegraph’s survey came as 200 business leaders and MPs, including Samantha Cameron, Mary Portas, Alexa Chung and Karren Brady, signed an open letter, calling on the UK Government to help tackle this "funding gap" and boost female entrepreneurship in Britain.
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Retail authority, Mary Portas, one of the co-signatories to The Telegraph’s letter, says she has experienced this discrimination repeatedly throughout her career. “There was one chief executive who made it very clear that he was only going to address my male business partner, even though I had 90% of the business.”
The letter says:
We are deeply concerned that some entrepreneurs - predominantly female - in Britain are being held back unfairly. Today, we are calling on you to take measures to help close the funding gap that prevents many women from starting their own businesses.
One in 8 working women in the UK wants to start their own business, according to research by FreeAgent and OnePoll, and yet here are some uncomfortable statistics:
The Entrepreneurs Network has found that just 9% of funding for UK startups goes to women-run businesses in the UK annually.
Men are 86% more likely to be funded by venture capital and 56% more likely to secure angel investment than women, according to the Entrepreneurs Network and Beauhurst.
In a new study by the Federation of Small Businesses, a quarter of female small business owners cited the ability to access traditional funding channels as a key challenge, with many relying on alternative sources - crowdfunding, personal cash and credit - for growth.
There has also been widespread research showing that women entrepreneurs, on average, have lower loan approval rates than men and can be charged higher interest rates.”
The letter was written to mark the launch of The Telegraph’s ‘Women Mean Business’ campaign, and to urge the Government to take measures to “help close the funding gap which prevents so many women from starting their own businesses.”
Research has found that female founders struggle to get their ideas taken seriously by predominantly male investors because of unconscious bias. According to the Entrepreneurs Network, men are a staggering 86% more likely than women to receive venture capital funding, and 56% more likely to secure angel investment. While women consistently receive fewer and smaller bank loans for higher interest rates than men.
In response to The Telegraph’s letter, the Treasury has set up a ‘serious review ‘and pledged to examine the challenges facing female entrepreneurs. The end result, due later this year, will be a report which “will be a “call to arms” for the financial sector to “sit up, take notice, and to act” to help break down the barriers women face when trying to access funding for a business in this country.”
In the meanwhile, do check out Allbright Collective if you’re a female founder in the UK to find out more about their funding programmes and their gorgeous Allbright Club in London. If you’re in the US, you might like to check out the Wing, another private club for women.
Wishing you a very Happy Women’s Day!
Question: How have you funded your business? What was your experience of getting investment? I love reading your feedback so please do take a moment to share let me know in the comments box below.
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