Impact of COVID-19 on female-led businesses

by Startacus Admin

 

The impact of COVID-19 on female-founded, equity-backed businesses is revealed in new report just released by The Female Founders Forum...

The Female Founders Forum, a project by think tank The Entrepreneurs Network, in partnership with Barclays have just released Resilience and Recovery, a new report revealing that female-founded, equity-backed businesses have been worse affected by the COVID-19 pandemic than their male counterparts.

Using data from Beauhurst’s COVID-19 Business Impact Tracker1, the report explores the reasons why female-led equity-backed businesses have been twice as likely to be worse affected as a result of the lockdown than male-founded businesses, suggesting these four factors:

The equity funding gap continues to persist

As revealed in last year’s Female Founders Forum report, Here and Now2, the share of funding to women-led firms has doubled in less than a decade. However, in 2020, just 13 per cent of total equity investment went to female-founded start-ups and when it did, it tended to be for smaller amounts.

Women have seen an increase in unpaid work at home during the pandemic

During lockdown, women in the UK have done two-thirds more childcare than men and, whilst prior to the pandemic mothers worked 80 per cent of the hours’ fathers did, during COVID-19 this has dropped to 70 per cent.

Appetite for external finance

Women are less likely to seek external finance to bolster their cash flows. However once female-founded businesses have received an initial investment, they are just as likely to raise additional rounds of funding compared to non-female-founded firms.

Sectors have been impacted differently by the COVID-19 pandemic

Women are more likely to work in industries which have been worse affected by the pandemic, such as retail and hospitality and leisure. Also, female-founded businesses are less likely to be tech or IP-based businesses (28 per cent and 33 per cent for all equity-funded start-ups), which have been most likely to find opportunities for growth as a result of the pandemic.

Positively, the Government’s Future Fund scheme, aimed at UK start-ups, has helped to address disparities in equity funding. Of the 590 businesses to receive financing through the Future Fund, 83 per cent have all-female or mixed-leadership teams.

To help female-led businesses continue to recover from the pandemic and tackle the gender gap in entrepreneurship, Barclays has pledged to help 100,000 women start-up and run their businesses over the next three years. 

Juliet Rogan, Barclays Head of High Growth and Entrepreneurs, said: “Whilst great strides have been made for female entrepreneurs in recent years, we know there is still some way to go to level the playing field. As a proud founding signatory of the HM Treasury Investing in Women Code, we hope that our latest commitment to support 100,000 women to start up and run their own business will empower more women to follow their business ambitions and give a boost to entrepreneurship in the UK.

“It’s absolutely critical to the economic recovery that we tap into female-led business potential, and drive forward the UK as one of the best places to be a female entrepreneur.”

Aria Babu, author of Resilience and Recovery, adds: “If we want a complete recovery from this recession, we need to see as many entrepreneurs as possible innovate and create new jobs. This means we cannot afford to keep barriers which prevent female entrepreneurs from realising their full talents.”

Our thoughts exactly! If you’re a female founder based in Northern Ireland, our upcoming Impacting Founders programme is worth checking out. Visit www.impactingfounders.com/2020 to register your interest.

 

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Published on: 13th October 2020