Despite the UK seeing a significant increase in tech companies starting up in 2022, the first half of 2023 saw investment in UK tech falling flat. While geopolitical uncertainty and rising interest rates have contributed to a fall in tech investment more generally, funding for tech companies in the UK saw the steepest drop off in Europe.
With the application of AI and the opportunities for tech to reshape the way we live and work continuing to be realised, there is no reason why we should be lagging behind our neighbours in securing investment and being at the forefront of global innovation.
However, one consistency in tech that can be found across the board is the significant struggle women face to secure funding and what a missed opportunity this creates. For women looking to finance their companies, investor hesitancy is stark – with the Theranos scandal only making it harder for female founders around the world to receive financial backing.
Last year, less than 2p of every £1 invested in the UK went to businesses with all female founding teams, compared to 85p for all male teams. Progress being made towards closing the gender pay gap must also be coupled with closing the investment gap if we want to change and improve the outlook of our economy.
The success of women-led organisations also speaks for itself. Recent reports discussed in Forbes show that companies with leadership teams made up of at least 30% women are 12 times more likely to be in the top 20% of their industry for financial performance. Research of over 84,000 leaders has also found that female leaders rate more effectively across every management level and age level. The conclusion? Women are a safe bet and women led organisations are a smart investment.
With sustainability buzzwords and greenwashing concerns on the rise, consumers and policymakers are rightly keen to hold organisations to account. As the UK tech sector seeks to expand and secure more funding, investors and leadership teams alike should now also be considering how they can prioritise diversification of leadership as part of their ESG commitments and ambitions.
At PLMR, we have had the pleasure of working with both women-owned tech companies and with tech companies with truly diverse leadership, allowing for a diversity of thought and perspective that is creating huge impact across the UK.
With inflation expected to continue to climb down and we look ahead to less stormy financial seas, previously cautious investors may be ready to increase their funding spend – giving us the opportunity to level out the pence per pound investment discrepancy in female founders.
When we lock out women-owned companies from investment so systematically, we only stand to lose – whether that be lost opportunities for returns on investments or the loss of innovative tech being developed and delivered. In order for the UK to meet its goal of accelerating the financing of British scale-ups and stimulating innovation, we must start by investing in women.