EY calls for more support for female founded businesses

The UK economy risks jeopardising a £7bn contribution from female-founded companies unless there is stronger support for rising women entrepreneurs, a new EY report has warned.

The report identified over 240 female-founded and led UK businesses with revenues between £20m and £50m that could grow into so-called ‘superscalers’ with the right resources and backing.

It found that 45 female-led superscaler companies – firms with revenues of more than £50m – contributed a combined £7bn to the UK economy in 2022 and employed more than 55,000 people. Examples include beauty brand Trinny London and recruitment specialist AMS.

However, it said current barriers, such as limited access to funding and entrenched regional and sector imbalances, are strangling progress and could stunt the growth of these businesses.

Currently, female-founded businesses in the UK receive just 2p for every £1 of investment, compared to 14p for mixed-gender founding teams and a huge 84p for male-only led ventures.

“Systemic barriers to growth are currently holding back too many potential superscalers,” said Lynn Rattigan, senior partner at EY Private. “Addressing these obstacles would unlock a new wave of highly successful businesses and drive growth, employment opportunities and prosperity for the UK.”

EY’s report also showed the geographic and industry disparities of female-founded businesses. Some 58 per cent of the potential superscalers are based in London and the South East, while 44 per cent of them operate in consumer goods and services.

Figures from the Women-led high-growth enterprise task-force report are similarly stark. Only 18 per cent of high growth enterprises in the UK have a woman on their founding team, while 18 per cent of these companies are led by all-male teams.

And, in the first half of 2024, female founders received just £145m of the £8bn in equity investment, representing just 1.8 per cent of the total.

Sam Smith, founder and former chief of finnCap Group, now Cavendish Financial, highlighted the challenges of scaling up: “Starting a business is hard, scaling a business is hard, and superscaling is the next stage of the female founder’s growth journey.

“It requires having a growth mindset, vision and ambition, but also the necessary support to navigate a system that I have seen first-hand does not always work for them,” she added.

Chancellor Rachel Reeves’ recently backed the Invest in Women Taskforce to close the UK’s female funding gap, but some remain sceptical that the money will actually go to female entrepreneurs.