New campaign calls for better access to investment for female entrepreneurs
Members of the UK business community have signed an open letter asking the Government to extend its funding deadlines for startups in the wake of the pandemic.
The letter particularly focuses on the challenges facing women business founders during COVID-19, as research by the International Monetary Fund suggests the pandemic has the potential to roll back 30 years of economic progress for women. Meanwhile, the Alison Rose Review of Entrepreneurship found that funding was a key barrier holding UK women back from starting or scaling businesses, and recommended increasing funding directly to female entrepreneurs.
The open letter is led by women’s startup, accelerator and investment movement We Are Radikl and calls for changes to the Government’s Seed Enterprise Investment Scheme (SEIS).
The scheme was set up in 2012 to fuel investment in startups by offering tax relief to investors. Under current legislation, businesses have just two years from the start of trading to apply for funding.
The open letter calls on Government to:
- Extend the deadline for SEIS applications from two years to three years
- Introduce gender reporting to SEIS, including a breakdown of the numbers of women entrepreneurs and investors
- Alongside its Peer Network scheme, redirect funds to women founders in the first three years of trading.
We Are Radikl Co-founder Sarah King believes that women are less likely to have time to work on their businesses, to know angel investors or to have even come across the SEIS within the two-year timescale. She believes this inequality has been exacerbated by additional responsibilities and demands on women’s time during the recent pandemic lockdowns.
“The odds are stacked against women business founders already,” said Sarah King. “New research by Extend Ventures shows that in the last decade, less than 1% of venture capital went to all-women teams at Seed stage and just one black woman CEO secured Series A funding. Just one!
“Women typically start businesses with 53% less capital on average than men. The Rose Review found that 38% of female entrepreneurs are mothers and of those, 60% do more parenting than their partners. This will certainly have increased with childcare and homeschooling pressures during the last year.
“Yet female-founded startups are growing rapidly, which suggests women want to build businesses more than ever.
“The Government now has a powerful opportunity to support the businesses of the future and to ensure women - and anyone else held back by the events of the last year - have the time and opportunity to access the funds they need to grow their businesses and be part of Britain’s economic build-back.”
The open letter has been signed by more than 300 people to date and is being supported by the Federation of Small Businesses.
FSB development manager, Natalie Gasson, said: “Currently in the UK, just 22% of small and medium sized business employers are majority women-owned. Research has found that 2.7 million women in the UK want to open a business, but due to a variety of reasons from confidence to the ability to access finance, they are not. This is a huge potential loss for the economy, if we were to harness this untapped potential it could potentially lead to an extra 340,000 businesses, and support 425,000 new jobs.
“FSB’s report Untapped Potential highlighted that for a quarter of women the ability to access finance was a key challenge to them starting their own business.
“Supporting women’s enterprise is crucial in helping individuals realise their full potential, and in turn boost the economy. That’s why FSB are backing the #overbeingunfunded campaign. Making the Seed Enterprise Investment Scheme (SEIS) more visible to women entrepreneurs has the ability to unlock a real boost for women’s entrepreneurship.”
Additional key supporters include Jeff Kelisky, CEO of investment platform Seedrs, and Kirsty Grant, its chief investment officer.
Seedrs CEO Jeff Kelisky said: “We know that one of the key barriers holding women back from starting and scaling businesses is funding - so one powerful solution is to increase funding directly to female entrepreneurs.
“SEIS is a brilliant model, if you have the time to get your business investment-ready within two years. By taking the simple step of extending the deadline, the Government would acknowledge the inequalities in the system and would enable women in particular to access the funds they need at this pivotal moment when the economy desperately needs new growth.”
As well as outlining key issues and requests, the open letter points to the ultimate success achieved by many women in business:
“Despite having less funding, fewer entrepreneurial role models and typically less time to spend on their businesses, women are just as successful as men in sustaining the companies they start, with 73% operating for 3-5 years or longer.
“Yet precisely because of all of these challenges, women are less likely to be able to access the SEIS funding that could make all the difference to their success.
“We are calling on the Government to take decisive action, enabling women - and a far wider pool of business owners - to be seen, be invested in and be part of our country’s economic recovery.”
We Are Radikl is based in Nottingham and has helped more than a thousand women across the UK to start, develop and scale their businesses. It delivers expert programmes and learning opportunities through courses designed to boost know-how and confidence, while providing a community platform for businesswomen to connect.
Sarah King and business partner Claire Dunn founded We Are Radikl in 2018, with the aim of disrupting the gender imbalance in entrepreneurship. They applied for funding through SEIS themselves and speak about the application process from first-hand experience.
“We worked incredibly hard in those first two years to get our business investor-ready in order to meet the SEIS deadline, and we just scraped through with 48 hours to go,” said Sarah King. “That was without a global pandemic, a recession, and trying to homeschool our children at the same time."
Campaign supporters are being asked to sign the open letter requesting the Government extend the SEIS deadline, introduce gender reporting into the scheme and channel funds to women entrepreneurs alongside its Peer Network programme. Organisers are also aiming to raise £21,750 to help sponsor female entrepreneurs through We Are Radikl’s acceleration programmes.
“This is a pivotal moment in Britain’s economic recovery,” said Sarah King. “The Government has the opportunity to empower female founders, and anyone who has been trying to launch or scale a business in the last year, by allowing them the time, support and resources to achieve their full potential.”