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Do men make better entrepreneurs than women? What do you think...

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Women Mean Business banner

Do men make better entrepreneurs than women? To even ask such a question seems outdated, misogynistic and misguided. Yet, if you go by the statistics, you might be led to believe otherwise.

According to a new report by The Entrepreneurs Network and Barclays, the amount of funding flowing into UK start ups doubled in 2017 compared to the year before. Yet, companies with at least one female founder saw total investment in their businesses fall by £1m.

What's more, women-led businesses in Britain got just 8.7 per cent of the total funding pie in 2017.

It's why a Government review into access to finance for our country's female entrepreneurs – spurred on by the Telegraph’s Women Mean Business campaign – is long overdue.

A recent paper from Aston University suggests the rate of entrepreneurialism in the UK has grown much faster in the past decade among women than men. And there is evidence to suggest that, where female-led start ups are properly funded, they have a longer shelf-life than those run by men.

But that is to split hairs. The point is this: women in the UK are facing barriers in accessing business funding via traditional routes - many of them down to unconscious bias. And that they aren't able to start off on an equal footing is simply unjust. That is what the 200 MPs, entrepreneurs and business leaders who signed the Telegraph's open letter calling on the Government to take action, pointed out. 

Women Mean Business | Read about our campaign
Women Mean Business | Read about our campaign

When you consider that Deloitte estimates targeted help for female founders could provide a £100 billion boost to the economy over the next 10 years, it becomes blinding obvious that this isn't an argument about a 'women's issue' -  it's a purely economic one. 

Where women also come unstuck is at the scale-up phase – and this is in large part down to funding. We know that companies which secure external financing scale up to 80 per cent faster.

Yet a series of trials, conducted by Harvard University, found that a female voice, name or picture reduced the odds of receiving investment. Equally alarming are the findings from a recent Columbia Business School and Wharton School study, which revealed venture capitalists pose different types of questions to male and female entrepreneurs: men are typically asked about the potential for gains, and women about possible losses.

For example, a male entrepreneur might be asked “What major milestones are you targeting for this year?” while his female counterpart is more likely to hear “How predictable are your future cash flows?”

But there is a silver lining to the ominous cloud hanging over female financing.

The Entrepreneurs Network, where I am editor, found that whereas in 2011, just 111 companies with one female founder secured a deal, that figure has increased to 901 deals in 2017. On the one hand, the data indicates women-led companies are asking for less money (and further research is required into the reasons why), but it also suggests a growing confidence around the pitching process, odds of securing investment and the business’s overall prospects.

It gives rise for optimism that investors are a re starting to take note, but a gaping funding gap still exists.

Women Mean Business: A call to action
Women Mean Business: A call to action

Progress never comes easily – it wasn’t so long ago that entrepreneurship was the preserve of the extremely wealthy or wilfully ambitious (in the eyes of society) – and reversing well-established trends within the investment sphere won’t happen overnight.

The Homophily principle dictates that investors will invest in innovators who look like themselves. And at the moment, that tends to be well-educated, well-connected and male. Their networks are difficult to penetrate; women remain underrepresented in venture capitalism, and the invisibility of female role models fuels the misconception that men are simply better suited to entrepreneurship.

Venture Capital firms are now aware of the diversity challenge in the industry. Gender parity won’t happen overnight, but these firms should meet with representatives from professions such as law and marketing to learn how progress can be made.

The reasons women-led businesses scale at a slower rate than those led by men extend beyond the financial. Lack of confidence – in part driven by a dearth of role models – continues to plague women. Girls are deterred from studying STEM subjects because they are perceived as the preserve of men - yet tech companies scale at a faster rate than in other industries.

We still lack a robust pipeline of upwardly mobile women in larger firms, yet we know that individuals who have previously held C-suite roles are more likely to become entrepreneurs.

Open Letter | Women Mean Business
Open Letter | Women Mean Business

But with just one per cent of UK companies getting to £1m in revenue and women-led firms accounting for just a tenth of growing companies with revenues between £1m and £250m, we must capitalise on the untapped potential of female founders.

Despite the promising new review into the funding gap announced by the Treasury last week - a day after the Telegraph launched its campaign - the Government’s approach remains too piecemeal.

We need a comprehensive strategy to get more female entrepreneurs into schools, more female VCs and engineers into university career fairs, and more female founders into the corridors of power, where they can outline the challenges unique to their gender and call for legal and regulatory changes based on those insights.

Female entrepreneurs are a huge potential resource. And if the research is correct - if female leaders really do outperform men in leadership skills such as goal-setting, compassion, even the ability to innovate - then we, and the Government, would be letting them and ourselves down if we didn’t do everything within our power to help.

Annabel Denham is Editor at The Entrepreneurs Network.