Women-led UK firms struggle to attract equal investment, study finds

Companies led by women disproportionately attract less investment than those led by men, according to a large-scale study of female entrepreneurship in the UK.

The Gender Index, which was launched on Thursday, is a research study of all 4.4m active UK companies and allows users to track the impact of female-led firms on the economy via an online, interactive tool.

The data identified that just under 17% of all active companies are led by women, but they only managed to attract less than 12% of 1.3m investments made in UK firms.

In comparison, 61% of active companies are led by men, and those firms attracted two-thirds (66%) of all investment. The remainder recorded 17% of investment obtained by firms led by a gender-balanced team, while 4.7% of investments were directed to companies where there was no information about gender of the leadership.

The Gender Index website was conceived as a means of creating a benchmark of the current levels of activity by businesses led by women, ranging from startups to listed companies.

The study found women-led companies not only were less likely to attract investment but also generated lower turnover than those run by their male counterparts, with average revenues of £1.3m a year, compared with £3.1m for businesses headed up by men.

Yet this comes at a time when women are starting more companies than ever before: the Gender Index recorded 145,200 new companies founded by women in 2021, according to statistics provided by mnAI, which also provided data for 2022’s Rose Review into female entrepreneurship, authored by NatWest chief executive Alison Rose.

The Gender Index is chaired by Jill Pay, who has a background in business management and became the first woman to hold the position of serjeant at arms in the House of Commons in 2008.

Pay said mapping the impact of female-founded companies was a first step towards “uncovering their potential and supporting their growth”, which is “paramount to a more inclusive, diverse and stronger economy”.

She added: “We now have the ability to map every company in every country, region, LEP [local enterprise partnership] and local authority across the UK, by sector, in real-time. By making this information public, our ambition is to ensure that greater support is provided to female-founded companies, helping to accelerate and stimulate fiscal and corporate growth.”

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