The UK economy can thrive by supporting women

Over the past two years, many people have had to find new ways to make ends meet as the economy has been disrupted by a pandemic and lockdowns. A less-told side to this story is that Companies House data shows that 140,000 companies were started by women in 2021, compared to 56,000 in 2019. The NatWest SME (Small and Medium Enterprises) Taskforce dedicated its most recent event to discussing how how women work Entrepreneurs can be better supported and funded to build on.

NatWest’s A Springboard to Recovery report highlighted that increasing female entrepreneurship and the productivity of women-owned businesses is one of the biggest opportunities for increasing UK Gross Value Added (GVA). More than doubling the number of women-owned businesses and increasing their productivity by around 40 per cent would result in GVA of around £50bn, creating around 50,000 new female entrepreneurs and 260,000 more women-owned businesses in the UK economy by 2030 would mean.

There have been a number of efforts to support more women entrepreneurs and remove the barriers they face. In 2019, Alison Rose, chief executive of NatWest Group, was asked by the Treasury Department to investigate why women face more barriers to entrepreneurship. In response to her report, the government announced that it would increase the number of women entrepreneurs by 50 percent to 600,000 by 2030.

“The headline of the first report, which many of you will remember, was that the UK economy lost £250bn Climate Commitment and Partnerships at NatWest.

Baker showcased some of the work she has been doing with strategic private and public sector partners to support entrepreneurs, particularly those from “hard to reach” and minority communities. “Two years into the pandemic, female entrepreneurship has shown exceptional resilience. And I think we were all surprised when we saw the number of women-founded companies that started last year,” she said.
“We know a lot of women have been affected by the vacation,” Baker continued, with roughly 58 percent of all vacationers being women. Many worked in lower-paying jobs and in sectors hit hard by the lockdowns, such as retail, health and beauty. “They all sat at home and thought, ‘What can I do with all this time?’ and they started a business,” she said.

However, one of the ongoing issues for women-owned businesses is scaling, and it is not yet clear whether these new businesses will continue as ‘sideline jobs’ or be scaled up. Baker said NatWest is introducing a gender index that will count live and regularly update businesses founded by women.
One of the main barriers for women remains access to finance. The data shows that companies run by women receive less money on average, such as from the Start-up Loan and Bounce Back Loans programs, and women often don’t ask for the amount of capital they need, Baker explained. This disparity in funding is a problem “widely”, she said.

“Women tend to be more conservative than men, although they tend to outperform men,” added Lendoe’s Demi Ariyo. “We have seen this across the board in our portfolio, especially with repayments.”

Launched in 2019 with 20 members, the Investing in Women Code requires financial institutions that sign up to share and report annually on their lending to women data. This means they are focused on making their processes easier for women to access finance. The Investing in Women Code now has 134 signatories, including mainstream banks and venture capitalists such as the UK Business Angels Association. Members are also making more funds available to women entrepreneurs. Rose of the NatWest Group has launched a £2bn SME fund at the bank and other banks are now following suit. There are also best practices to support entrepreneurs, such as event programs, mentoring and access to markets and networks.
Childcare is another important issue for women entrepreneurs as many women take on even more care responsibilities during the pandemic. Female entrepreneurs took on an average of six to 10 hours more caregiving than their male counterparts, and 62 percent are less likely to recover financially because of this disparity, Baker said.

The UK Business Angels Association is working with NatWest and other partners on an investment campaign for women angels with a focus on regional events to support mentoring and stakeholder work. The organization’s chair, Jenny Tooth, said they are currently painting the image of female angel investors and running a “Women Empowering Women” campaign to encourage female investors to invest in women-owned companies.

In a difficult economic environment, investing in women entrepreneurs and businesses run by women can bring enormous economic and social benefits. The challenge is to remove the long barriers that are preventing women from starting up or expanding, and to ensure that the impact of economic uncertainties in 2022 does not halt or reverse the progress we are making as a business community.

You can read the latest Rose Review progress report here:

Andrew Harrison is Head of Business Banking at NatWest Group

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