8th Report - Female entrepreneurship

It should be a concern to all that a tiny fraction of venture capital investment goes to supporting women-led businesses. Despite numerous reviews and initiatives this situation is getting worse not better. Venture capital firms must do more to challenge themselves into providing investment on a more equitable basis including by increasing the proportion of women on investment committees as a priority. The Government should use the levers at its disposal to encourage systemic change in the industry. We set out some key steps it can take later in this Report. (Conclusion, Paragraph 19)

The prize of £250 billion plus in potential growth is one that the Government should throw everything it has at pursuing. Current piecemeal initiatives have had little impact, systemic change is required. First and foremost this needs to be led by increasing access to finance for female-founders. Evidence has shown that this will not happen organically, and, as demonstrated elsewhere by countries such as Canada, significant state intervention is required. (Conclusion, Paragraph 35)

We welcome new initiatives by the British Business Bank to support more women into venture capital, particularly the commitment that at least 50% of investment from the Investor Pathways Capital initiative will be targeted at female fund managers and the £100 million investment in the Invest in Women Taskforce. However, we believe there is scope for the Bank to do more across the full range of its activity. (Conclusion, Paragraph 36)

We recommend that the British Business Bank should: • have a fifth strategic objective, to ensure that equity finance to female entrepreneurs in the UK increases from 2% to 10% by 2030; • set itself the target of ensuring that no less than 30% of the finance it makes available to UK businesses is allocated to supporting female- led businesses; • ensure gender balance on its investment/assessment committees; and 52 • require all investors seeking its support to sign up to the Investing in Women Code. (Recommendation, Paragraph 37)

We do not accept arguments that transparency and accountability in venture capital are too difficult, and neither should the Government. The Financial Conduct Authority should be mandated to require all registered venture capital firms to report on the number and proportion of deals that go to support female-led businesses and the overall proportion of funding that represents. These details should be published on an annual basis. Financial penalties should be levied on firms who do not comply with this reporting requirement. This regime should be introduced in this Parliament. (Recommendation, Paragraph 38)

In the immediate term, the British Business Bank must take more of an interest in whom its funding supports. Venture capital firms and angel investors that benefit from public funding should be required to demonstrate gender-equitable investment decisions. The British Business Bank should require all investors it supports to provide data on the proportion of that finance they make available to female-led businesses. (Recommendation, Paragraph 39)

Wo do not support mandating gender quotas on investment committees at this stage, as measures to improve transparency and increased incentives to change behaviour should be given time to have an effect; but the Government should not rule out intervention in the future if the level of venture capital investment in female entrepreneurs shows no sign of improvement. (Recommendation, Paragraph 40)

Innovate UK provides an essential funding stream for mainly male entrepreneurs. Women who seek to access funding from it report their projects being undervalued and subject to biased investment decisions from majority male assessment panels. Match funding requirements exclude women who already struggle to access investment while application processes are onerous. Innovate UK’s decision to allocate only half of the available funding from the Women in Innovation programme was extraordinary and suggestive of a much deeper problem in which women are treated as a second order priority by the UK’s research establishment. (Conclusion, Paragraph 47)

Public funding structures should challenge gender bias and not reinforce it. Innovate UK should: • ringfence a minimum of 30% of its funding for female entrepreneurs with year on year increases to 40% by 2030; 53 • in the short term lower leverage ratios and reduce match funding requirements for women-owned businesses to help level the playing field and allow equitable access to opportunity; • ensure gender-equitable assessment panels; • publish gender-disaggregated data on funding applications, approvals and allocations, that data should include information on ethnicity and disability of applicants; • recognise femtech as a high value sector; and • review programme design and application processes, critically evaluating them for potential forms of indirect discrimination that may act as barriers to female founders. (Recommendation, Paragraph 48)

The Industrial Strategy and SME Strategy were ideal opportunities for the Government to launch the systemic change required to unlock the enormous potential that female-led businesses can offer. It is deeply disappointing that neither strategy contained any specific measures to support female-led businesses. (Conclusion, Paragraph 54)

The Government should develop and publish an ambitious strategy for advancing female entrepreneurship to sit alongside and complement the existing Industrial Strategy and SME Strategy. This strategy should be published within 12 months. It should be developed in consultation with stakeholders across the investment landscape but particularly female entrepreneurs. It should include a focus on sectors of the economy not deemed to be high growth such as beauty and social enterprise, where female entrepreneurs currently feel overlooked despite delivering long- term sustainable growth and employment. The recommendations of our report should provide a good starting point for such a strategy. (Recommendation, Paragraph 55)

The strategy should be overseen by a dedicated Minister and Office within the Department for Business and Trade akin to the US Office of Women’s Business Ownership, with an assigned budget and responsibility for driving implementation of the strategy, and ensuring accountability and transparency through data collection. (Recommendation, Paragraph 56)

The Government should set itself a target for the proportion of public contracts awarded to female-led businesses similar to initiatives in Canada, the US and Nordic countries. Given the low base we suggest a target of at least 10% by the end of this Parliament. The proposed new Office should have responsibility for driving this reform and provide training and support to help female founders navigate public procurement processes. (Recommendation, Paragraph 57) 54

Angel investment is a vital lifeline for early-stage female-led businesses, particularly in sectors where institutional funding remains elusive. While recent growth in angel investment for women-led ventures is encouraging, the gender imbalance among angel investors continues to limit progress. Increasing the proportion of women in angel networks directly correlates with higher investment in female-founded and mixed-gender teams. Training programmes and peer-led initiatives are helping to build confidence and capability among aspiring female investors, but more needs to be done to scale these efforts. (Conclusion, Paragraph 66)

We welcome the increase in funding to the British Business Bank’s Regional Angel Programme. However, we are not reassured that a sufficient proportion of the funding will go to addressing the market failure in support for female entrepreneurs and we are concerned about transparency in who receives funding from it. (Conclusion, Paragraph 67)

We call on the British Business Bank to ringfence a minimum of 30% of Regional Angel Programme funding for supporting female angel investors and investment in female-led businesses across the regions and to publish data on take-up by gender. The Bank should also review the access requirements to the programme to ensure that smaller angel groups, particularly those led by women who have less capital behind them than their male peers, are able to benefit from the Programme’s co-investment funds. (Recommendation, Paragraph 68)

Tax incentives such as SEIS and EIS have proven effective in stimulating investment. Yet awareness, accessibility and take-up remain lower among women investors and outside of the South East. To achieve meaningful change, government and industry must work together to raise awareness of the benefits of tax incentives, build inclusive investment communities, and ensure that female entrepreneurs have equal access to the financial tools needed to grow and succeed. (Conclusion, Paragraph 72)

The Government should launch a Female Enterprise Investment Scheme to sit alongside the EIS and SEIS, with higher incentives to specifically drive investment in women-led businesses. People who invest in women-led businesses should receive greater benefits. Existing biases in the investment landscape and a lack of awareness of existing reliefs show that a new, easily marketable, marquee incentive is required. Such an investment in female entrepreneurship by the Government would serve to demonstrate its commitment to supporting female-generated economic growth. The scheme should allow SEIS-level tax breaks of up to a £2 million threshold. (Recommendation, Paragraph 73)

The Government should remove entirely the age limit on eligibility for the Enterprise Investment Scheme (EIS). The existing seven-year threshold does not adequately reflect the structural and social challenges faced by many 55 female founders, including longer growth trajectories typical of the sectors in which they operate and the impact of caregiving-related career breaks. Extending the eligibility period would better accommodate these realities, promote gender equity in access to growth capital, and support the scaling of female-led enterprises across the UK. (Recommendation, Paragraph 74)

The government should launch a campaign to increase awareness of the SEIS, EIS and proposed FEIS schemes among investors and female entrepreneurs. The campaign should be appropriately tailored to ensure underrepresented groups of women are aware of the schemes. The Government should collect data on the schemes by gender and region to monitor take-up. (Recommendation, Paragraph 75)

There is a clear gap in support for female entrepreneurs who wish to scale their business or even to make it sustainable, particularly those whose businesses do not fall within those sectors of the economy considered ‘high growth’. We believe the Invest in Women Taskforce is an appropriate vehicle to deliver such support but it is hampered by a lack of capital in its fund of funds. (Conclusion, Paragraph 86)

Institutional investors, including major banks and pension funds, are a key component of the funding landscape. We call on them to do much more to support female-led businesses, including through supporting the Invest in Women Taskforce. (Recommendation, Paragraph 87)

The Government should update us in its response to this Report on the steps it is taking through its convening powers to get those investors, particularly the signatories of the Mansion House Accord, to support the Taskforce. (Recommendation, Paragraph 88) Networks and support

There is a lack of pitch events, accelerators, networks and mentorship opportunities for female founders. Many that do exist tend to be focused on the ‘Golden Triangle’ of Cambridge, Oxford and London, limiting the growth potential of businesses in other regions. This disproportionately affects women, who are more likely to start businesses outside this hub. Without a deliberate shift in focus, the UK risks entrenching geographic and gender inequalities in entrepreneurship and missing out on the full economic potential of its diverse regions. (Conclusion, Paragraph 108)

We received compelling evidence on the value of tailored mentorship programmes and support both for investors and founders. More regional initiatives are being developed but, while these are extremely welcome, 56 we are concerned that they are too small in scale to deliver the growth the country needs. A coordinated, state-backed national programme is required. (Conclusion, Paragraph 109)

As part of a new Strategy for Female Entrepreneurship, the Government should establish a large-scale nationwide programme dedicated to supporting female founders across all sectors to sustain and scale up their businesses. The programme should offer mentorship, sponsorship, coaching and networking for female entrepreneurs with a particular focus on raising capital. It should seek to connect female founders with industry leaders and experienced entrepreneurs from diverse backgrounds and sectors who can offer guidance on business scaling, investment negotiations and market expansion. The Government should work with Metro Mayors to develop the hubs in their areas and to ensure they are appropriately tailored to meet regional needs and locally supported and promoted. (Recommendation, Paragraph 110)

The Government should develop a specific programme of promoting targeted, female-focused accelerators in high growth sectors where women are underrepresented. Such a measure was noticeably missing from the Industrial Strategy. (Recommendation, Paragraph 111)

Universities are a vital source of innovative start-ups, but evidence to this inquiry suggests women are less likely to take up entrepreneurship courses and/or develop spinouts than their male peers. This is a missed opportunity for growth. The Government should work with UKRI to develop a specific programme of dedicated entrepreneurial support for women in postgraduate and postdoctoral studies. The programme should include increased opportunities for, and better signposting to, entrepreneurial fellowships, funding and pre-accelerator programmes. It should include female-focused networks for sharing experience, mentorship and guidance and seek to instil confidence in taking the step towards entrepreneurship. (Recommendation, Paragraph 112)

Alongside a strategy on female entrepreneurship, the Government should launch a national campaign highlighting female role models at all stages of the entrepreneurial journey. It also needs to better promote the Invest in Women Hub. (Recommendation, Paragraph 113) Caregiving and maternity

Self-employed women (and those employed via their small business) are poorly served by the UK’s parental leave arrangements. As part of its Parental Leave and Pay Review, the Government should review legislation 57 pertaining to maternity through the lens of a self-employed woman and seek to tailor policies to support women’s entrepreneurial aspirations. (Recommendation, Paragraph 126)

We acknowledge the Government’s desire to protect a mother’s time with her baby. As such, we recommend that Maternity Allowance is increased for self-employed mothers in the first six weeks to bring it closer in line with Statutory Maternity Pay. This will allow more mothers to spend time with their babies in the early weeks. A very limited number of Keeping in Touch days should be permitted in this period. After six weeks we recommend self- employed mothers be allowed to Keep In Touch with their business as often as necessary. (Recommendation, Paragraph 127)

The Department for Work and Pensions should review funding for Universal Credit and reclassify Maternity Allowance so that it is not treated as “unearned income” for the purposes of Universal Credit, so that when self-employed women access it, their Universal Credit is not reduced. (Recommendation, Paragraph 128)

We reiterate the conclusions from our report on paternity and shared parental leave. Improved paternity leave and pay and reform to the shared parental scheme is long overdue and would directly benefit female entrepreneurs. (Recommendation, Paragraph 129)

Caregiving responsibilities and the cost and availability of childcare remain significant, yet often overlooked, barriers to female entrepreneurship. Women are disproportionately affected by the demands of caregiving, which limits their time, income, and ability to scale their businesses, particularly during critical growth phases. (Conclusion, Paragraph 135)

Current tax and support systems are largely designed for traditional employment models and fail to accommodate the realities of self- employment and entrepreneurship. This not only places an unfair financial burden on entrepreneurial mothers but also reinforces outdated assumptions about gender roles and business viability. (Conclusion, Paragraph 136)

The availability and affordability of childcare must be addressed to increase entrepreneurship rates among women. Making childcare more easily available and affordable would benefit the founding, performance and persistence of female-led businesses, while being vital for reconciling work and family demands and promoting individual wellbeing. (Conclusion, Paragraph 137)

The Government should undertake a review of the adequacy of existing childcare support for self-employed mothers. That review should consider: the potential merits of making childcare a tax-deductible expense, if only 58 for an initial period; expanding free hours of childcare to include services, such as nannying, that can cover the period from 0–3 months, when most nurseries do not accept babies; how to encourage more flexible childcare services; and making support, such as tax relief or pension credits, available to encourage family members other than parents to undertake childcare and relieve some of the burden borne by the mother. (Recommendation, Paragraph 138) Financial education and enterprise skills

Young people in the UK show strong entrepreneurial ambition, yet a lack of financial education and awareness hinders their ability to turn aspirations into viable businesses. While initiatives like Young Enterprise and Talk Learn Do demonstrate the positive impact of financial literacy, there remains a significant gap in provision in the education system. Financial and enterprise education is often introduced too late, missing the opportunity to build foundational skills and confidence from an early age. (Conclusion, Paragraph 147)

This gap disproportionately affects young women, who will face greater barriers in accessing networks, mentorship, and funding, and whose confidence drops as they progress through education. Embedding enterprise and financial literacy skills into the curriculum is essential to creating a diverse and capable pipeline of future entrepreneurs. (Conclusion, Paragraph 148)

The Government should work to increase the provision and relevance of financial and enterprise education in schools and to ensure that it is delivered as a core part of the curriculum. Seeking to increase the financial confidence of girls should be a key element of the provision. (Recommendation, Paragraph 149)

Women and girls remain underrepresented in STEM subjects and less likely to pursue entrepreneurship in this field. The Government and higher education institutes should work to address gender bias in curriculum design in STEM subjects and strive to increase the visibility of female role models to support this work. (Recommendation, Paragraph 150) 59