15 March 2021|Business Growth, Latest Posts, Launching a business
By Olivia Sibony. The UK has one of the most developed startup ecosystems in the world. Yet in one key area it falls down. Namely the huge gender imbalance in the startups winning investment. To put this into context, research from the British Bank shows that for every £1 of Venture Capital investment, all-female founding teams get just 1p.
As well as being a travesty for anyone who believes in reducing inequality, it is also bad from a business perspective. According to research from Catalyst.Org, 67% of all UK Household consumption is controlled or influenced by women. Yet their needs are often unmet in a world where so many products and services are brought to market without the input of half of the population. Across the country there are so many entrepreneurial women with brilliant ideas and dreams currently unrealised due to the failure to win financial backing.
As a result of Covid, the situation looks even more precarious with investors sticking with more established businesses, more likely to be male-led. Despite these challenges, there are many practical things we can do to shake things up and boost the number of female entrepreneurs. So what practical steps can we take to break the cycle?
Building a network
The old world of start-up investment was very much a closed world. It was all about connections, often from old school ties which tend to be stronger with men. This is then often reinforced throughout our lives. The recent controversies around the awarding of PPE contracts help to highlight the power of connections like nothing else. Platforms like Angel Investment Network, SeedTribe and crowdfunding platforms have undoubtedly helped to shake things up by democratising the world of early stage investing but much more work needs to be done. Women need to be proactive in building their own networks to redress the balance. Encouragingly there are a host of forums for women to network and create their own forums. This includes investment groups such as Angel Academe, which trains and empowers women to invest in female-owned start-ups and Ada Ventures which invests in under-represented founders; the Female Founders Forum, set up jointly by Barclays and The Entrepreneur Network (TEN), or more specialised groups such as Hatch’s incubator for first-time female founders and the Mayor of London’s Women in Cleantech group. Once you know groups are out there, there’s likely one to suit your needs. And if you can’t find one, you can join a more generalist one and ask within that group.
Being bolder in pitches and asks
Research from Barclays pointed to Britain’s female entrepreneurs being less likely than men to ask for business funding to scale up operations. We are also likely to be more timid in pitches. We shouldn’t be afraid to be direct and ask for what we need to take a business to the heights it deserves. In my experience investors will be impressed with the vision and will buy into the ambition. Investors are expecting to be asked for money, so don’t merely insinuate you would quite like it; tell them in no uncertain terms the amount you require, the uses it will be put to and the share they can expect in return. As with the Female Founder groups, you’ll be surprised how much you can receive if you simply ask.
Really researching the investor
Learning to switch perspectives to put the best argument forward is one of the simple steps we can do to increase our chances of investment. My experience of launching my old start-up GrubClub was vital in helping me understand the importance of different perspectives. I would then tweak and adapt my pitch according to the investor I was speaking to. Really researching each investor, including their background and interests, was vital for enabling me to focus on the different reasons for them to invest. It’s also helpful to ask the investor directly about their prior investments. In the same way you would expect an investor to conduct Due Diligence on your company and you as a founder, it’s good practice for the entrepreneur to be open and proactive about the Due Diligence she does on the investor. I did all this while always making sure I was staying true to the soul and values of GrubClub. It’s important to be flexible and open to other approaches, but never to the detriment of what is fundamental to your company.
Backing other women
In instigating change, we need to be the change we want to see. It’s up to women to support other women in the industry in whatever ways we can. This will be the only way to disrupt an entrenched system. Having launched and sold my own business, I dedicate my time to supporting impactful entrepreneurs to grow in more sustainable ways. Certainly we need more successful women to become investors themselves to shake up the system. Our own research on the AIN platform revealed that only 10% of investors on the platform were women. If we can encourage more women investors, we will start to see the level of funding increase for female-led startups. This will in turn create a virtuous circle of successful female entrepreneurs who are likely to become female-backing investors themselves.
However, support doesn’t just include fundraising. It is also about opportunities to connect with professionals who can collaborate with them to help them grow along the way, or offering mentoring or other support. The individual power we all have is far greater than we realise. Let’s use it to make the change we want to see and power forward a new generation of brilliant female-led startups.
Break the cycle – be diverse in your network
While we can draw incredible strength, camaraderie and shared understanding in joining groups of women, it’s important to not mirror the patterns of exclusion that our society has created over time. If we want to truly break the cycle, we need to embrace diversity and proactively seek to build a network that includes other genders, as well as more broadly people who are different to us – be that ethnicity, socio-economic background, culture, industry, age. We have so much to learn from people’s different experiences and perspectives. All humans – regardless of their identity – are programmed to seek people who are the same as them. While in some circles this is helpful – and I wholeheartedly encourage women to join women’s networks – we also need to go beyond this and build our own personal network which embraces diversity. This is not the easy solution, as it entails differences, but it’s a better reflection of our reality. It is a strategy that will help any entrepreneur build a business and solution more resilient and sustainable, that is much more likely to thrive in a fast-changing complex world.
Let’s break the cycle and be the catalysts for the change we need to transform the prospects for female entrepreneurs.
About the Author
Olivia Sibony is an award-winning entrepreneur and trailblazing ethical investment champion. She founded foodtech startup, GrubClub, which she sold to Eatwith in 2017. She joined Angel Investment Network, (AIN) the world’s largest angel investment platform to launch and grow SeedTribe, a spinoff platform focused specifically on connecting “impactful” businesses with investors and the support they need. She has also recently been appointed an advisor to the Department for Trade encouraging impact-led startups to set up in the UK.