When mum-of-two Sonal Keay decided to start her own business in 2018, self-doubt was her biggest barrier.
At first, the founder and CEO of This is Silk, which sells silk skin, hair and sleep solutions, says she questioned whether she could make it as a ‘mum entrepreneur’. She also worried about the impact it would have on her family – and their finances.
But after spending 15 years in criminal defence work, Keay was inspired to help others after living with a rare skin condition that makes her allergic to daylight. One of the first steps she took to build her business was joining the British Association of Women Entrepreneurs (BAWE) – a move she says helped broaden her network considerably.
“It helped practically because they often had the kind of actionable advice that only years of experience can give,” said Keay in an email to NerdWallet. “Also, it helped psychologically because I could see that others had trodden the path I now wanted to tread.”
Keay’s persistence paid off. Just five years after launching This Is Silk, Keay said it’s now the leading silk skincare company in the UK. She was also nominated as one of the ‘Top 100 Female Entrepreneurs to Watch’ by The Telegraph and NatWest in 2022.
Closing the gap in funding for women-led firms
Last year, women in the UK started more than 150,000 new companies – up by 167% from 56,200 women-founded companies in 2018 – according to the 2023 Alison Rose Review of Female Entrepreneurship report. Women-led companies represented roughly 20% of all businesses in the UK, the report found.
While these figures show measurable progress, more work is needed to close the wide gap in funding and support.
Louise Oliver, president of BAWE, noted that in recent years the government has put increased pressure on banks to look at diversity – and that includes support for women-led businesses. She pointed out, however, that banks are typically conservative in their lending decisions.
“[The government’s] pressure on the banks is having an effect because they have a remit and a target,” said Oliver. “But I still see that they are looking for businesses that are already showing signs of success. And they’re not taking on the risk.”
About 25% of venture funding goes to women-led teams but for significantly lower amounts than the funds companies founded by men receive, according to the Accelerate to Excel joint paper by think tank The Entrepreneurs Network and Barclays.
This study found that 11.4% of equity finance goes to companies with a woman founder while just 3.5% goes to all-women founding teams. It also revealed that the disparity is “not at all proportional to [women’s] presence in the business population as a whole”.
Women also struggle to get the cash flow they need, with 43% saying they don’t have adequate cash flow for business growth compared to 29% of owners who are men, according to data from Bibby Financial Services’ SME Confidence Tracker in April 2023.
Gender bias plays a key role in funding gap
Gender bias is still pervasive when it comes to funding – especially in the tech world. In fact, 87% of all venture capital funding in Europe is still raised by men-only founding teams. Meanwhile, the share of funding raised by women-only teams has fallen from 3% to 1% since 2018, according to the 2022 State of European Tech Report.
After founders hit the three-year mark after starting a business, it’s time to seek out capital – and that’s typically when many struggle if they don’t have solid connections, Oliver pointed out.
“That’s the time when they need to have the right network and the confidence of a good business plan in place in order to present to the various lenders,” she said. “The more you spread your message, the more likely people will feel your passion – and the more likely it is they might want to be invested in your business.”
Initiatives to support women entrepreneurs
The Alison Rose Review of Female Entrepreneurship progress report 2023 found that 190 banks, venture capital firms, angel investment firms and other financial services organisations are signatories to the government-led Investing in Women Code initiative, up from 134 signatories this time a year ago.
Aside from traditional lending and grants, women entrepreneurs can approach angel investors. For example, Angel Academe works with high-net-worth investors with the aim of investing in women-led businesses with high growth potential.
“The Women Backing Women campaign by the Women Angel Investment Taskforce has engaged thousands of new and prospective women angel investors to help unlock new sources of early-stage funding for founders across the UK,” according to the Accelerate to Excel report.
In addition to BAWE, Keay recommended that women leaders connect with Buy Women Built, Female Founders Rise (an angel investment platform for women) and Focused for Business for support.
Mum entrepreneurs also need support
A barrier many mum entrepreneurs face is balancing the demands of founding a start up with those of being a mum, particularly when it comes to childcare.
This issue is often overlooked, said Oliver, who was a mum of two young boys when she started her own business in 1997.
“There isn’t a lot of child support benefits for women starting their businesses,” said Oliver. “If you’re in the comfort of a corporate, you get maternity pay. You get a little bit from the government being self-employed, but nothing that would keep you or be used to survive.”
She added that she believes the government needs to step in with better solutions to help address the high costs of childcare.
Angel investors and venture firms could also do more to support mum entrepreneurs. For instance, London-based investment firm Ada Ventures launched a pilot scheme in October that offers founders in its portfolio who are working parents up to 40 hours of free back-up childcare a year, including babysitters, night nannies or holiday clubs.
But it’s not just about childcare, Keay pointed out that being a mum can introduce another bias into the funding process. “Women who become mothers often change the nature and structure of their work, becoming self-employed, for example, and this shift away from the ‘traditional’ [work] model can compromise applications for finance,” she explained.
Whether it’s funding, advice or support you need, the most powerful resource women entrepreneurs can use is each other.
“I am not a natural socialiser and was used to working alone, but meeting other women in business has really changed my life in so many ways. Starting a business can be lonely and draining, and I had two young children. To feel that companionship was everything,” said Keay.
Image source: Getty Images
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