There is huge unrealised economic potential in female entrepreneurship in the UK, but only if we can secure the right conditions for women to start and scale new businesses at the same rate as men. The government-commissioned Alison Rose Review 2019 shows that female entrepreneurship represents a £250 billion opportunity for the UK economy.
According to a Deloitte report in 2016, less than 6% of working-age UK women are involved in early-stage entrepreneurship compared to more than 10% of men. It predicts that increasing female participation to 10% would make the overall economic contribution of women-led SMEs higher than £180bn by 2025. The report also shows that targeted help for early-stage women entrepreneurs could provide a £100bn boost to the UK economy over the next ten years.
Thus, a clear need exists for programmes that can deliver the capacity-building necessary to transform the landscape for female entrepreneurship and tap into the full unrealised economic potential of women entrepreneurs.
Driven by this urgent need, I joined Cambridge Judge Business School’s Entrepreneurship Centre to re-design EnterpriseWOMEN, a programme informed by research, to help women entrepreneurs become more successful at founding start-ups, raising funds and scaling up.
My research is currently investigating the needs of women founders through in-depth interviews and focus groups to map obstacles throughout a founder’s entrepreneurial journey and identify key reasons that may hold a woman back. This research will shape the programme modules and the necessary interventions that it will offer.
The public sector as a major enabler for female entrepreneurship
Private-led initiatives like EnterpriseWOMEN are elemental in supporting female entrepreneurs locally. However, to maximise their chances of success and achieve a larger cross-country impact, government policies and interventions play a key role. The UK government has led various efforts within this space such as the 2003 Strategic Framework for Women’s Enterprise and the initiatives prompted by the 2015 Burt Report, as well as its forthcoming Gender Equality and Economic Empowerment Strategy. However, supportive policies that address the challenges women face in entrepreneurship remain essential to drive institutional change and foster strong opportunities for high-potential entrepreneurship.
Driven by an ambition to help shape a nation-wide policy, and to ensure that the results of our research inform such policy development, I met with Jonathan Gorrie, Executive Director at UK Government Investments, to discuss the role of the UK government in supporting women entrepreneurship and bridging the funding gap, as well as how the UK funding allocation and financial firms can help advance a more balanced and fair industry. Jonathan currently advises ministers and senior officials on large corporate finance transactions and commercial negotiations with the private sector and was previously a portfolio manager at BlackRock. He is also a policy fellow of the Centre for Science and Policy (CSaP) at the University of Cambridge which links academics with policy makers to improve the use of evidence and expertise in public policy. The meeting was arranged by CSaP where I am part of their Networks of Evidence and Expertise for Public Policy.
The meeting revolved around two main issues that my research identified: the social and cultural barriers women entrepreneurs face, and access to funding.
Social and cultural barriers
My research shows that family responsibilities have an impact on the general rate of female entrepreneurship. Some of the female CEOs I met expressed concern on starting a family and taking maternity leave when they have already taken the responsibility to lead. “Who leads or manages my business operations if I go on maternity leave?”, one of them said. Moreover, family care costs can be prohibitive for entrepreneurs, especially those in their early stages. According to the Alison Rose Review, they may be over £1,000/month per child. Jonathan and I discussed a major policy intervention the UK government could introduce to further female entrepreneurship and gender equality more broadly, which is free childcare. This would help women get back to work especially within the entrepreneurial space. Moreover, incentivising couples to take shared parental leave, or a “family leave” would help split childcare responsibility more equally between men and women. For example, the Canadian government is working with the private sector to improve childcare support as part of addressing barriers to women’s entrepreneurship. In the United States, BridgeCare Finance was set up to help professional parents with childcare payments. Perhaps not coincidentally, Canada and the US score highest in the percentage of women engaged in entrepreneurial activity according to 2017 statistics by the Global Entrepreneurship Monitor. In Canada, 15% of women aged 18-64 run their own businesses and about 11% of women in the US, compared to 5.6% in the UK.
My research also identified access to funding as a crucial barrier to scaling. This mirrors the findings of the Alison Rose Review which also recommends increasing the funding directed to women entrepreneurs through initiatives such as launching new investment vehicles, promoting greater transparency in funding allocations and lending journeys of investors and business owners and launching funding rounds for businesses in female-dominated sectors.
Within this vein, Jonathan referred to the British Business Bank, a government-owned business development bank which provides financial support, advice and opportunities to small and medium enterprises. Their recent report in collaboration with Diversity VC and the British Private Equity & Venture Capital Association revealed that for every pound of venture capital investment, less than one penny goes to all-female led teams. The report also encourages higher transparency in collecting and reporting diversity and inclusion data on founders by venture capital firms. However, it is not clear how the British Business Bank will further act on such sobering statistics.
EnterpriseWOMEN is currently being designed to create a vibrant community of women entrepreneurs by providing them access to networks, resources and business know-how so they can overcome barriers, sustain and grow their businesses, and emerge as market leaders. We hope this will contribute to having more successful businesses women who can supercharge the economic growth in the UK.
Disclaimer: The views expressed are those of the author and not necessarily endorsed by Cambridge Judge Business School Entrepreneurship Centre or any College or institution the author is part of.