Survey finds clear prejudice behind lack of investment in women-led businesses.
Close to 90pc of UK- and Ireland-based women founders who believe they experienced discrimination during funding rounds have cited sexism as a factor.
That’s according to a survey of more than 200 start-up bosses in the UK and Ireland by workspace accelerator Huckletree.
‘The sad reality is that would-be entrepreneurs who don’t fit the stereotype often face very challenging experiences, putting them off entrepreneurship altogether’
– GABRIELA HERSHAM
The company has launched a campaign called Fairer Funding Now to ensure greater diversity among start-ups getting investment.
The study found that 16pc of the bosses faced discrimination while seeking investment, with a further 27pc reporting that they know a founder who faced prejudice during the process. Of the respondents who gave details of discrimination they had faced, 86pc stated sexism, echoing the lack of investment going to women-led businesses.
Just 15pc of funding went to companies with a female founder in 2017 – a figure that has shown little signs of improving over the last five years (17pc in 2016, 15pc in 2015, 14pc in 2014 and 14pc in 2013).
“The fact that so much discrimination still exists lies in complete contrast to the concept of the technology and innovation ecosystems being ‘open to all’,” said Huckletree CEO and co-founder Gabriela Hersham.
“The sad reality is that would-be entrepreneurs who don’t fit the stereotype often face very challenging experiences, putting them off entrepreneurship altogether.”
Equal opportunities do not exist in tech funding
Huckletree’s survey found that a troubling 28pc of female start-up leaders have experienced discrimination first-hand during the process of pitching and attending funding meetings.
Those in finance were the most likely to have experienced discrimination while raising funds, with a disturbing 41pc of respondents in this field saying they have experienced it. Discrimination in the technology and property sectors was also shown to be common, with 32pc and 27pc, respectively, stating it had happened to them.
When asked about opportunities to secure investment, there was widespread agreement that female and ethnic minority founders face challenges simply because of their gender, race or background.
Only 9pc of women believe they have equal opportunities to men to raise funding. Only 17pc of black start-up leaders think equal opportunities exist regardless of background. This drops even further with Asian leaders (7pc) and leaders who are mixed-race (4pc).
Opinion was split when leaders were asked about solutions to discrimination and lack of diversity across industry funding. While many agreed that greater visibility of diverse founders (51pc) and better knowledge sharing across start-up communities (50pc) were deemed to be positive solutions, the idea of imposing diversity quotas on investment and venture capital firms was more divisive, with 24pc agreeing this should be considered.
However, leaders shown to face difficulty securing funding were more likely to agree quotas should be considered. While 27pc of men believe quotas are a good idea, 44pc of women think they should be imposed, rising to half (51pc) of female leaders from ethnic minority backgrounds.
“While crowdfunding has gone some way to redress the balance by providing entrepreneurs access to a more diverse pool of investors, the world of finance still has a long way to go to ensure all ambitious entrepreneurs can access funding to take their business to the next stage,” said Luke Lang, co-founder of Crowdcube, which is supporting the Fairer Funding Now campaign.