Written evidence submitted by Athena FundX [FEN0009]

Barriers Facing Women in Entrepreneurship and Solutions for Growth

Barriers Facing Women Entrepreneurs in the UK

Women, particularly those from ethnic minority backgrounds, face numerous barriers when seeking to start and grow successful businesses in the UK. These challenges include:

1. Access to Finance: Women entrepreneurs often struggle to secure funding due to gender bias in investment decisions, lower levels of wealth accumulation, and a lack of financial history. Studies show that women-led businesses receive significantly less venture capital and private equity funding than their male counterparts.
2. Childcare Responsibilities: Many women entrepreneurs juggle childcare responsibilities with business growth, making it difficult to dedicate time to their ventures. The high cost of childcare further exacerbates this issue.
3. Access to Networks and Mentorship: Women often lack access to key business networks, mentors, and industry-specific connections, which are crucial for securing investment and scaling businesses.
4. Societal and Cultural Expectations: Traditional gender roles and biases can discourage women from pursuing entrepreneurship, particularly in male-dominated industries.

Sectors with the Greatest Barriers

Women face the highest barriers to entrepreneurship in sectors such as:

●        Finance and FinTech: These industries are male-dominated, with limited representation of women in leadership roles. Bias in funding allocations and networking gaps further hinder progress.

●        Technology and STEM: Women are underrepresented in tech-related fields, leading to fewer female-led start-ups and limited access to venture capital.

●        Construction and Manufacturing: These sectors often have ingrained gender biases that make it difficult for women to enter and grow businesses.

Tackling Barriers to Funding for Women Entrepreneurs

To help women overcome funding challenges, the following actions can be taken:

1. More Inclusive Investment Policies: Encouraging investors to commit a percentage of their portfolios to women-led businesses can help level the playing field.
2. Government-backed Funding Schemes: Expanding initiatives similar to the SEIS/EIS tax relief schemes to incentivize investments in female-led businesses.
3. Alternative Credit Scoring Models: AI-powered financial solutions that assess individual traits and business performance rather than traditional credit histories can provide fairer access to finance.
4. Education and Financial Literacy Programs: Enhancing financial knowledge among women entrepreneurs can boost confidence in navigating funding processes.

Best Practices in Supporting Female Entrepreneurship

Several successful initiatives exist both in the UK and internationally:

●        Athena FundX: This platform leverages AI to create alternative credit scoring systems that help women entrepreneurs secure funding without traditional credit histories.

●        Government of Ghana: This government of Ghana is building the world’s first Women development Bank. A financial institution dedicated to financial inclusion for women and women in business

●        Government of Kenya: The Kenyan government is undertaking a nation-wide financial education scheme for women in business to know and understand their funding options and utilise government funding to grow their businesses.

●        Canada’s Women Entrepreneurship Strategy – A $2 billion initiative providing funding, mentorship, and market access support to female entrepreneurs..

Government Support for High-Growth Female-Led Enterprises

The UK Government can take the following steps to boost female-led high-growth enterprises:

1. Childcare Support: Introducing tax credits or subsidies for childcare can ease the burden on female entrepreneurs.
2. Mandatory Supplier Diversity: Requiring large businesses to include women-led firms in procurement contracts can create more opportunities.
3. Tax Incentives for Investors: Expanding tax relief programs to encourage more investment in women-led businesses.
4. National Mentorship and Networking Programs: Establishing government-supported mentorship schemes for female entrepreneurs.

Data Collection and Monitoring Progress

To track success and ensure accountability, more robust data collection is needed, including:

●        Gender-disaggregated Investment Data: To measure the percentage of funding allocated to female-led businesses.

●        Longitudinal Studies: To track the growth and sustainability of women-led enterprises over time.

●        Sector-Specific Reports: Analyzing which industries are improving and which require more targeted intervention.

By addressing these barriers and implementing targeted solutions, the UK can create a more inclusive and thriving entrepreneurial ecosystem for women, driving economic growth and innovation.

February 2025