Advertisement

How female-founded businesses bucked the trend for resilience throughout the pandemic

 In 2020, just 13 per cent of total equity investment went to female-founded start-ups and when it did, it tended to be for smaller amounts.
In 2020, just 13 per cent of total equity investment went to female-founded start-ups and when it did, it tended to be for smaller amounts.

Female-founded, equity-backed businesses demonstrated high levels of resilience throughout the pandemic, a new report has found.

The report from the Female Founders Forum, shows that over 60 per cent of female-founded businesses are now operating with minimal disruption to their business.

This is despite the fact that female-led businesses’ suffered more disruptions, such as closures in premises or delaying a product launch, from the fall-out of the pandemic than male-led ones.

The Resilience and Recovery report, which was part of a project by think tank The Entrepreneurs Network, in partnership with Barclays, used data from Beauhurst’s Covid-19 Business Impact Tracker to explore why female-founded businesses were more likely to be disrupted as a result of covid-19.

The disruption was partly down to the number of women doing unpaid work during the pandemic, the report found. During lockdown, women in the UK have done two-thirds more childcare than men. Prior to the pandemic mothers worked 80 per cent of the hours’ fathers did; however, during covid-19 this has dropped to 70 per cent. These figures come just months after research demonstrated that women will be worse off as a result of the economic fallout from Covid-19 - the subject of the Telegraph’s Equality Check campaign, which launched in June.

Women are also more likely to work in industries which have been worse affected by the pandemic, such as retail, hospitality and leisure.  Research by think-tank the Resolution Foundation shows that almost 20 per cent of women work in sectors such as retail and hospitality that have suffered job losses and earnings cuts, compared to 13 per cent of men.

Research shows that equity funding remains a big problem for female entrepreneurs. In 2020, just 13 per cent of total equity investment went to female-founded start-ups and when it did, it tended to be for smaller amounts. However, the 2019 Female Founders Forum report shows that the share of funding to women-led firms has doubled in less than a decade.

The report also demonstrated that women are less likely to seek external finance to bolster their cash flows. Previous research published in the Telegraph shows that female founders of SMEs are twice as likely to be discouraged from borrowing money than male entrepreneurs.

However, female-led businesses are crucial for the economy. The gender gap in entrepreneurship is equivalent to an economic shortfall of £250 billion according to the Female Founders Forum. Women-led businesses in the UK generate 10 per cent more revenue, deliver double the return on investment for financial backers and are less likely to lead businesses that fail than their male counterparts.

The latest research shows things are looking up for women. Once female-founded businesses have received an initial investment, they are just as likely to raise additional rounds of funding compared to non-female-founded firms. Furthermore, out of 590 businesses to receive funding through the Government’s Future Fund scheme, 83 per cent have all-female or mixed-leadership teams.

To aid female businesses on their road to recovery, Barclays has pledged to help 100,000 women start-up and run their businesses over the next three years. The bank will target local events and mentoring via Barclays’ UK-wide network of Eagle Labs and Rise hubs, increasing training and tools for Barclays coverage teams, as well as dedicated regional champions across the UK.

Alongside providing support to help female businesses recover, the report also recommended several policy changes. It detailed that the Department for International Trade should commit to publishing statistics on the gender breakdown of SME exporters, and that the Government should include crisis planning in business support applications. It also suggested that the Government should make Statutory Shared Parental Pay (SSPP) the same as Statutory Maternity Pay (SMP).

Juliet Rogan, Barclays Head of High Growth and Entrepreneurs, said that there is still “some way to go to level out the playing field” for female entrepreneurs.

"It’s absolutely critical to the economic recovery that we tap into female-led business potential, and drive forward the UK as one of the best places to be a female entrepreneur," she said.