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Female entrepreneurs are battling Britain's £250bn gender bias problem

Ben Chapman

“Mummy, she’s beautiful... And she looks like me,” said Selma Nicholls’ three-year old daughter Riley-Ann, excitedly pointing at the screen. Captivating her attention was Quvenzhané Wallis, a young black actress playing Annie in the remake of the classic Eighties musical.

For Nicholls that moment four years ago prompted a sigh of relief and a spark of inspiration. Her daughter, still only in nursery, had recently begun coming home and asking for straight hair and lighter skin - just like her favourite cartoon characters.

Watching Annie, Riley-Ann had for the first time identified with a positive image of a young black woman on screen.

It prompted Nicholls to set up talent and model agency Looks like Me in 2015. The business aims to get more black and minority ethnic (BAME) children into advertising and film in order to combat the problem of being confronted with largely white role models on screen.

The company has been helped by funding and support from Virgin Startup, a non-profit investment organisation. Virgin Startup is itself attempting to tackle a different lack of representation in the investment world.

Just as young ethnic minority viewers may struggle to find people on screen who look like them, female entrepreneurs taking the nerve-wracking step of seeking investment for their businesses face a similar obstacle when it comes to gender.

The people staring back at them as they pitch their new idea they are likely to be almost entirely male faces. Just 13 per cent of senior people on UK investment teams are women, and almost half of investment teams have no women at all.

This contributes to a stark gender imbalance in the businesses that investors decide to fund, just one in five of which is founded by a woman. In a bid to begin combatting the problem Virgin Startup this week pledged to ensure that half of all the businesses it funds in future are founded by a woman.

£250bn

Amount of economic value lost in UK because of barriers to women founding successful startups

The distinct gender bias women face understandably puts many female entrepreneurs off starting their own business. Add to this the fact that women still take on a far larger share of childcare responsibilities than men and it is little wonder that comparatively few women are willing to take the plunge.

While this is obviously unfair it is also economically short-sighted. The UK is losing out on £250bn of economic value every year because women face barriers to becoming successful entrepreneurs, according to an independent review.

But signs of positive change are beginning to emerge and the issue is at the very least on the government’s agenda.

It commissioned the Rose Review into female entrepreneurship, which reported earlier this year.

Alison Rose, who led the review, was just announced as the new chief executive of RBS, a move that will make her the first boss of a major UK bank, a sign perhaps that the male-dominated world of finance is belatedly undergoing a shift in outlook.

But change is equally needed outside the doors of the big banks, in the smaller firms that provide capital for early-stage businesses.

Rose found that a lack of start-up funding is the number one barrier preventing female would-be founders starting a business. Women start businesses with 53 per cent less capital on average than men, are less aware of funding options and less likely to take on debt.

(Looks like me)

To combat this the review recommended making more start-up funding available to women. The rewards for the wider economy and society could be huge, even if Britain does not achieve full gender parity in levels of entrepreneurship but catches up with its best-performing peers.

While the UK is in many ways the startup capital of Europe, with a rapidly growing number of new businesses, it lags well behind the Netherlands, Spain, Australia, the US and Sweden in terms of the proportion of founders who are women, according to the Global Entrepreneurship Monitor.

The ratio of female to male entrepreneurs in the UK is 0.46 - or more than 2 to 1 in favour of men - putting it close to the bottom of the class among wealthy countries; far below Spain on 0.8 and little more than half the rate in the Netherlands of 0.9. Catching up with the Netherlands could unlock £200bn in value, according to the Rose report.

For investors, putting money into businesses that count women among their founders also makes financial sense.

There is a substantial and growing body of evidence that gender diversity fosters creativity and results in better decision making by encouraging new perspectives which men on their own frequently lack or disregard.

While there is more research into this effect at the level of large companies than small startups, the findings are instructive.

A recent study of over 1,000 companies found that those in the top quartile for executive-level gender diversity are 21 per cent more likely to be more profitable than peers in the bottom quartile. When looking at longer-term value the gap is even larger at 27 per cent.

For Nicholls, the issue of diversity is more personal. When she heard her daughter doubt herself she says she drew on her experience as a producer.

"I went into full producer mode, thinking 'what is the solution; what can I do to help her and other children to grow their mindsets and know that every child is beautiful in their own right?'"

But Nicholls also had her own self-doubt to conquer. "I remember saying that people may not believe in my idea. It's a massive leap from sharing it with friends to pitching to Virgin Startup but once I did it was such smooth sailing."

She has a message for other would-be founders out there: "For any woman who has doubts about it; whether because they’ve got a family or childcare to think about, whatever else it may be, I strongly believe, speaking from experience, that there are really supportive networks out there.

"You learn so much from other participants who have got their own businesses at different stages."

After more than three years of hard work, her own business is thriving, having just signed a global partnership deal with Getty Images. It's also having the impact Nicholls wanted to see when she first set out.

"I've been working for so hard for so long and to know now that I’ve got a global partner that is so proud to work with us is amazing. We’re also going to be collaborating with female photographers so that they can be visible, be seen."

She adds: "No one can deny that the industry has become more diverse, it’s much more inclusive and that’s only growing and reflecting the diverse country that we live in.

"We’re taking everyone with us. It’s a beautiful thing."