For women entrepreneurs operating in a highly competitive market, growing your business can feel like a constant uphill battle, particularly when it comes to raising investment for your venture – it’s called the gender funding gap.
A mere 3% of venture capital funding is awarded to businesses founded by women, according to Crunchbase research. But across the pond, the U.K. is tackling its gender funding gap head on, through a government-backed taskforce which has just raised £255 million ($320M) to invest specifically in female-founded businesses. I spoke to the women leading the charge to find out how they are closing the gender funding gap.
The U.K. Gender Funding Gap
Women are underrepresented as investors and they are also underfunded in their businesses as founders. The gender funding gap describes the disparity between investment funding and venture capital allocated to female entrepreneurs versus their male counterparts. Whilst the gender funding gap in the U.S. means that women founded companies now receive slightly more than the 2% of venture funding they got in 2022, in the U.K., the outlook has been bleak as well.
“The gender investment gap in the U.K. is embarrassingly low – if you are a female founder in the U.K. trying to secure funding, the odds are stacked against you,” multi-exit entrepreneur and investor Debbie Woskow tells me.
“The biggest barrier as a woman is when you walk into that room to pitch, you are more than likely to be faced with a room full of men. Only 11% of senior investment roles at the U.K. firms are held by women and 14% of angel investors are female. The stark reality is that women are more likely to invest in other women, but without female representation in senior positions influencing the flow of capital, the scales of investment will remain unbalanced,” she said.
And for high growth businesses, the slow rate of change just can’t keep up. A U.K. government report on women-led high growth enterprises published earlier this year stated: “For every £1 ($1.26) of equity investment in the U.K., just 2p (2.5 cents) goes to fully female-founded businesses, representing no improvement in the past decade.”
Although the U.K. has not seen dramatic progress when it comes to funding parity for women led businesses, now could be the moment for the tide to finally turn in a positive direction.
Women-Powered Businesses Are On The Rise
A common justification for the gender funding gap is that there simply aren not enough women business owners in the marketplace – so by consequence, there are fewer female entrepreneurs around to receive funding. But now, there is evidence that the disparate representation of women founders is steadily improving.
J.P. Morgan Private Bank’s new research report produced with Beauhurst titled, “Top 200 Women-Powered Businesses,” found that women-founded companies have increased from 18.3% in 2021 to 29.7% in 2024. What’s more, although overall investment has been falling in recent years, women-led businesses in the U.K. secured 23.2% of the total funds raised, a slight increase from 23% in 2022.
“It is incredibly positive to see that women-powered businesses are continuing to be a driving force of the British economy,” Maya Prabhu, market head for the U.K. domestic business at J.P. Morgan Private Bank, tells me.
“Many well known brands which are making waves in the market have been founded and scaled by women, from the likes of Beauty Pie, founded by Marcia Kilgore, to Tropic Skincare, founded by Susie Ma and Shreddy, Tala and The Productivity Method founded by Grace Beverley,” she said.
Closing The U.K. Gender Funding Gap
Heading into 2025, there’s a rosier outlook for female founders in the U.K. Although there is an undeniably long road ahead to achieve gender parity for funding, proportionately the investment in women-led ventures has slowly and slightly increased.
A new initiative, the Invest in Women Taskforce, is aiming to accelerate that progress in the U.K.
Wosskow, co-chair of the taskforce said: “The Invest in Women Taskforce is an industry led, government backed initiative established to tackle the funding gap in the U.K. Our first focus since our inception earlier this year has been to create a £250 million ($314M) funding pot for female-powered businesses, deployed via female investment professionals.”
“The Invest in Women Taskforce was established to make the UK the best place in the world to be a female entrepreneur,” Hannah Bernard, the head of business banking at Barclays, and co-chair of the taskforce tells me.
“For too long, innovative female-powered businesses have been held back due to a lack of funding; we are bringing the public and private sector together to change the status quo and create systemic change on both sides of the table,” she said.
Since launching the taskforce in March 2024, Bernard and Wosskow have just exceeded their fundraising target and raised £255 million ($320M), creating one of the world’s largest investment pools for women-led and mixed businesses. Now, the duo is ready to deploy the capital to women-powered businesses through female investment decision makers and fund managers across the U.K.
“This funding pot represents a significant milestone, but there is still so much more work to do. We want, and need, to drive systemic change in the funding ecosystem,” said Wosskow.
Bernard added: “It’s important that we drive this change systemically; we know that female investors are twice as likely to invest in female entrepreneurs, which is how we are setting ourselves up for generational change by starting right at the top.”
And with a brighter future ahead for female founders in the U.K., there is no reason why similar initiatives can’t work to close the gender funding gap in the U.S. as well. The key to a brighter and more prosperous future is more women represented in the right influential positions.
Closing the gender funding gap might finally seem achievable. “We know that women back women, which is why female entrepreneurs need more female investors — creating a ripple effect of opportunity,” said Bernard.