Call for Evidence | The venture capital market.


This submission is provided by we are radikl, a grass-roots start-up, accelerator and investment movement designed by and for women entrepreneurs and angel investors in the U.K. 


we are radikl are the creators of the #overbeingunderfunded campaign which calls on the Treasury and BEIS to make changes to the Seed Enterprise Investment Scheme to make early-stage investment more accessible to women entrepreneurs and investors.  The campaign - which launched in May 2021 -  is supported by our local MP Ruth Edwards, the Federation of Small Business, Virgin Start-Up and Seedrs and has been featured in The Times, The Politics Show, ITV News and most recently in Parliament on International Womens Day.  In May this year, we met with the Small Business Minister Paul Scully to discuss the campaign and have been invited to contribute to his Enterprise Strategy.


The current state of the Venture Capital Market


We believe the most significant threat to the Venture Capital Market is the lack of investment being made by the current incumbents into women-founded businesses and the missed economic, societal and environmental value such investments would create.


This inequality has been extensively reported via Government commissioned reports (Alison Rose Review, 2019[1]) and by sector experts (UKBAA[2], Beauhurst[3]) and yet little significantly impactful progress has been made.


It’s our hypothesis that this inequality is created as a result of the prevailing culture and accepted belief that the male experience of money is universal and therefore financial products and services have been designed on the assumption that “what’s right for me will be right for you”.


And yet womens experience of money is completely different.  We spend and save differently.  We invest differently.  We use data differently to make financial decisions. Our investments yield a greater return. We value different things and we live for longer. 


This lack of seeing by the Financial Services sector (and in this case, the VC market) has created a void. It has been estimated that if the Financial Services sector designed products and services specifically for women, an additional $700bn in annual revenue could be realised[4].  To realise the proportion of this benefit that could come from the VC sector will take a significant culture shift as well as innovative, disruptive solutions which create change.




Our recommendations focus on 3 key areas:


         The level of co-operation/integration between start-ups and established industry

         The operation and effectiveness of the current tax incentives

         The role of other key bodies and the effectiveness of government policy around venture capital in meeting wider government objectives



The Level of co-operation/integration between start-ups and established industry


It is widely known that gender inequality exists in most settings and this is certainly the case when it comes to the VC sector.


With women making up only 5.7% of VC Partners it is perhaps not surprising that the level of investment in women-founded businesses is so low. 


Awareness of investment pathways and access to investor networks are cited globally as  the key systemic barriers to women securing investment.  It’s our belief that this is a reflection of the lack of integration between diverse-founded start-ups and the established VC sector.


We would like to see more education and awareness raising campaigns which set out the role funding and investment could play in the growth journey of a small business and the stages of investment to consider - when and why.


We would also like to see more dedicated funding streams protected for diverse founders and that the decision-makers of these funds are themselves diverse and are therefore more likely to recognise the innovative potential of these businesses and the ways in which these Founders grow their businesses.


In regard to integration between large organisations more broadly and small businesses, for many small businesses to succeed it is crucial that they secure B2B contracts with large organisations and yet in the same way some investor networks are inaccessible to women entrepreneurs, this is also true when establishing the required networks to broker these commercial agreements.


Our grass roots insights and experience has highlighted two key issues:


1)       Large organisations citing the challenge of ‘where to find’ women-founded businesses; and

2)     Small Businesses being set up to meet the required contractual requirements of working with a large organisation


We recommend that a U.K.-wide programme is created inviting large organisations who prioritise supply chain diversity to roadshow and round table events with the diverse Founders of small businesses.   Alongside this, am education programme for small businesses on how to get their businesses set up to successfully establish commercial partnerships with large organisations.


The operation and effectiveness of the current tax incentives


It is a fact that women entrepreneurs are underfunded, underrepresented and underestimated. The odds are consistently, invisibly stacked against women entrepreneurs. Yet there are simple, powerful ways Government can re-stack these odds to create positive change for us all.


With the phenomenal economic challenges ahead, pandemic recovery will not be easy, or quick. And yet women business owners - who have the potential to play a significant role in our recovery - are being overlooked.

This is why our #overbeingunderfunded campaign calls on the Government to take simple steps to address the gender inequalities that exist within entrepreneurship and investment. Steps which will make it easier to tap into the enormous, unrealised economic potential of women entrepreneurs (estimated to be an additional £250bn revenue to the UK economy by 2030[5]).

In 2019, the Alison Rose Review of Entrepreneurship, commissioned by the Treasury, identified barriers holding UK women back from starting or scaling businesses. Access to and awareness of funding was highlighted as the number one issue for women entrepreneurs - at every stage of entrepreneurship. The report found that women launch businesses with 53% less capital on average than men and only 1% of UK Venture Capital funding goes to all-women teams. Staggeringly, Extend Ventures[6] found that between 2009 and 2019, black women entrepreneurs received only 0.02% of funding overall.

Building on Alison Rose’s recommendations to increase funding directed towards women entrepreneurs, we are calling on the Government to take decisive action to make small, yet powerful changes to its Seed Enterprise Investment Scheme (SEIS) to enable more women - and a far more diverse pool of business owners - to be seen, to be invested in and, as a result, to play a significant role in our country’s economic recovery.

Why is change needed?

SEIS was created in 2012 to fuel investment in start-ups. And to date, over £1 billion has been invested. To access the scheme successfully, you must:

         Be aware of the scheme’s existence

         Have access to investors

         Have built an investment-ready business within 2 years of your first trading date

And this is where the odds are invisibly stacked against women entrepreneurs.

Because women are less likely to know the scheme exists. According to the Alison Rose Review of Entrepreneurship, only 30% of women know an entrepreneur. Without those contacts, networks and role models, it’s far less likely women will hear about schemes like SEIS at all.

Because women are less likely to have access to the investor network they need. If only 30% of women know an entrepreneur, far fewer will know an investor, or consider investment as part of their growth strategy – putting SEIS even further out of reach.

Because women have less time to get their businesses investment-ready by the 2-year deadline. Women do far more unpaid work in the home, and the pandemic only exacerbated this. In fact, research by Deloitte shows that the number of women who say they’re responsible for 75% or more of caregiving responsibilities nearly tripled during the pandemic. This has disproportionately impacted their careers and left them with even less time to work on their own businesses, and even less chance of hitting the SEIS deadline.

As champions of women-led businesses, we believe the current Seed Enterprise Investment Scheme fails to recognise these fundamental differences and the unique challenges women entrepreneurs face.

Right now, we have a powerful opportunity to support the businesses of the future, in a moment when the economy desperately needs new growth. Despite being underfunded, having fewer entrepreneurial role models and typically having less time to spend on their businesses, women are as successful as men in sustaining the companies they start.

Which is why we’re calling on the Government to:

         Extend the SEIS deadline from 2 years to 3 years from the start of trading

         Introduce gender, race and ethnicity reporting on SEIS (for both entrepreneurs and investors) creating a true picture of early stage funding that can help to drive change, everywhere it’s needed

         To allocate funding towards a targeted program of activities / campaigns to increase awareness of the Seed Enterprise Investment Scheme to women entrepreneurs across the U.K.

With these changes we believe more women will secure early stage investment in their businesses via SEIS which will then enable them to go on to further investment rounds via the VC sector.



The role of other key bodies and the effectiveness of government policy around venture capital in meeting wider government objectives


It is our belief that until the Government puts gender on the same footing as net zero and levelling up, we will not realise the £250bn revenue opportunity of women-founded businesses in the U.K.


Until Board Members and Shareholders of large organisations are held to account on gender in the same way they now are on net zero, it will be too easy to whitewash activities.


The short-sightedness of this approach is significant given:


         women-founded businesses are more likely to achieve profit through purpose and to create businesses which have societal and environmental strategy at their core

         For every pound invested in a female founded business, returns (financial and non-financial) are greater


With this in mind we recommend a review of the significance and prominence of gender alongside net zero and the levelling up agenda to ensure programmes are invested in which address these inequalities so that we can realise the economic, societal and environmental benefits of women-founded businesses.


we are radikl | June 2022 | The venture capital market - Call for evidence