Investing in Women Code Signatories Promote Gender Equality in Venture Capital Deals
In a remarkable achievement for gender equality in the business world, a recent report highlights that venture capital deals made by signatories of the Investing in Women Code (IWC) are far more likely to feature at least one female founder compared to the wider market. This marks the third consecutive year that IWC signatories have outperformed the venture capital market.
The report showcases the vital role played by diverse investment committees in narrowing the investment gap. With 204 signatories, the IWC now covers a significant portion of the SME lending market, accounting for 39% of UK venture and growth equity deals, up from 24% in 2020.
Achieving Gender Balance: Impact of the Investing in Women Code
According to the report, last year, 35% of all venture capital deals made by Investing in Women Code signatories were in female-founded companies, surpassing the market average of 27%. This achievement underlines the effectiveness of the Code in promoting gender balance in the entrepreneurial landscape.
The Investing in Women Code was established in 2019 as a groundbreaking government-led initiative following the findings of the Rose Review, which identified the lack of funding as a major hurdle for women entrepreneurs aiming to scale their businesses. The Code has since garnered the support of over 200 organizations, indicating a growing commitment among lenders and investors to direct finance towards women-led businesses.
Equal access to finance is a catalyst for empowering female founders and fostering economic growth. Business and Trade Secretary and Minister for Women and Equalities, Kemi Badenoch, expressed her enthusiasm for the progress made by Investing in Women Code members in narrowing the finance gap between male and female entrepreneurs. Badenoch emphasized the importance of the UK becoming a gender-neutral business hub, where entrepreneurial success knows no gender boundaries.
The report also highlights other key findings, including the increasing market share of venture capital firms that have embraced the Code. In 2022, UK venture capital deals involving IWC signatories rose to an impressive 39% from 24% in the previous year.
The report further showcases the growing support for the Code, as new signatories such as British Patient Capital, M&G Catalyst, and the University of Exeter join the ranks. Additionally, the percentage of deals made by venture capital firms with all-female teams rose from 6% in 2021 to 9% in 2022, bringing it in line with the levels achieved by VC signatories.
Challenges and Priorities: Closing the Funding Gap for Female Entrepreneurs
Despite the progress made, the report highlights the need for greater female representation on investment committees. On average, signatories reported 32% female representation in their investment teams and 24% on their investment committees. The report suggests that more diverse investment committees positively impact successful pitches from all-female and mixed-gender leadership teams, making this an area of crucial focus.
The challenging economic landscape influenced the funding landscape for female entrepreneurs, with Angel group signatories reporting a decrease in funding requests by all-female teams compared to the previous year. However, this was also accompanied by a decrease in funding requests from all-male teams.
With 23 lenders currently signed up to the Code, including Funding Circle and six new additions, a diverse range of products and services are now available to SMEs across the UK. Furthermore, targeted initiatives are being implemented to provide support to women-led businesses.
While progress has been made, it is evident that closing funding gaps remains a priority. Signatories continue to implement various measures to improve support for female entrepreneurs, such as connecting them with female-focused networks, adopting diversity metrics and policies, and providing mentoring and training opportunities.
Industry Leader Comments
The Minister for Enterprise, Markets and Small Business, Kevin Hollinrake MP, expressed his delight at the growing number of signatories for the Investing in Women Code and the positive impact it has had on female founders’ access to finance. Hollinrake urged continued efforts to bridge the finance gap and provide greater financial support for female entrepreneurs.
Jenny Tooth OBE, Executive Chair of the UK Business Angels Association, commended the increasing number of Angel groups joining the Code, demonstrating the Angel community’s commitment to embracing diversity and recognizing the investment potential of women founders. Tooth acknowledged the challenging economic climate for Angel investment in the latter half of 2022 and expressed hopes for an improving economic environment in 2023.
Catherine Lewis La Torre, Rose Review Board Member and British Patient Capital CEO, recognized the significant progress made by venture capital firms in becoming signatories and driving positive changes in investment behaviors. The report confirms that IWC signatories are fulfilling their commitment to support more female-led businesses compared to the overall market.
While celebrating these milestones, Lewis La Torre acknowledged the persistent funding gap for female entrepreneurs and emphasized the collective effort required to unlock their potential.
Stephen Pegge, Managing Director of Commercial Finance at UK Finance, stressed the critical role of female entrepreneurs in the UK’s growth objectives and applauded the initiatives launched by signatories to the Investing in Women Code, which are already yielding positive outcomes. Pegge acknowledged the need for continued efforts, particularly in less-developed finance ecosystems across regions and nations in the UK.
Michael Moore, Chief Executive of the British Private Equity and Venture Capital Association, highlighted the progress made in signatories and the growing proportion of VC deals involving Code supporters. Moore reaffirmed the industry’s commitment to address funding gaps between female-led and male-led investing, aiming for meaningful progress and the removal of persistent barriers.
The third annual report by the Investing in Women Code provides a comprehensive overview of the strides made in supporting female entrepreneurs and narrowing the investment gap. While there is still work to be done, the report underscores the commitment and collective effort of signatories to create a more inclusive and prosperous business ecosystem.
For more information, refer to the British Business Bank’s website.
Sources: THX News, Department for Business and Trade, Kevin Hollinrake MP & The Rt Hon Kemi Badenoch MP.
