Despite pensions being one of the most complicated financial products to engage with, the most common question I get asked as the CEO of PensionBee is not to do with pensions, but instead my experience as a female founder.
In the UK, only one in three entrepreneurs are women and while there is a growing recognition that disparities exist between male and female entrepreneurs, it is a problem that has been going on far too long, preventing the UK economy from achieving approximately £250bn in growth.
When you look at the number of female CEOs of listed companies over the years, the situation is dire and progress has been unforgivably slow. Women do not lack the ability or desire to start and grow their own businesses, but yet they all face the same obstacle - funding. The Rose Review of Female Entrepreneurship found that female-led businesses receive less funding than businesses led by men at ‘every stage of the journey’.
This is a complex problem where, on average, women launch businesses with less capital than men and are likely to have less access to funding options as well as sponsors, mentors or professional support. In addition, venture capital (VC) funding is disproportionately invested by male investors into businesses led by men, accounting for female founders receiving less than 1% of all VC funding. Ultimately, this pattern leaves female founders starved of capital during critical points such as starting and scaling their business, meaning the circle of exclusion continues.
Recently, I was invited to an MP’s dinner to discuss how we can improve the environment for female entrepreneurs in the UK. There’s been a lot of talk about wanting to fix things, but this needs to translate into real figures. I strongly believe the only way to achieve true gender parity is to set targets now.
The Financial Conduct Authority recently mandated that listed companies have to disclose targets on the representation of women and ethnic minorities on their board and executive management, making it easier for investors to see the diversity of their senior leadership team. If a company cannot meet these targets, they need to explain why. I gladly welcome these new requirements, and would like to see them go even further. It’s time for private markets and large VC funds to face the same demands, disclosing diversity ratios annually in their partnerships and portfolios.
Similarly, while the government recently announced the launch of its new taskforce, dedicated to boosting the number of women starting fast-growing companies, funding beyond specific ‘female schemes’ has often been unfairly distributed. It was reported that just over 1% of all funding from the Future Fund - the government’s start-up rescue package during the pandemic - went to teams led by women. In comparison, around 20% went to companies led entirely by men and the remainder was for those with mixed gender teams. If we are to truly tackle the funding barrier, government funding programs need to lead by example.
Finally, not only should pay gap reporting be a mandatory ask for any company operating in the UK, but public targets should also be necessary for all reporting companies. The gender pay gap is almost exclusively framed as an issue women should be solving themselves, and while there are actions women can take to fight the cause, solely placing the burden on the recipient of the problem is neither effective, nor fair. Equal pay for equal work is fundamentally the best way to ensure that we can build a strong pipeline of female talent in our economy, while public targets will help ensure a level playing field for future generations of female entrepreneurs.