Summit ‘24 Insights: Plugging the Equity Finance Gap to Female Founders

Thursday 27th June 2024

The huge gender gap in the levels of equity funding accessed by entrepreneurs remains stubborn, with female founders receiving less than 2% of venture capital globally. To address this, founders, investors and other ecosystem actors speaking at the 2024 Annual Summit identified four of the most effective levers to getting more equity to female founders:

1. Get More Women into Investment Roles

Representation matters when it comes to investment decisions, yet women make up just 20% of investment professionals in 186 private equity and venture capital firms across the UK and Europe, according to Hephzi Pemberton, Founder & CEO of Honordex. Shockingly, 12% of these firms have no women in their investment teams. 

While career paths into decision-making roles at PE and VC firms are are typically opaque, panelists agreed the introduction of stronger accountability measures on diversity, equity and inclusion, along with public commitments and transparent reporting as modeled by signatories to the Investing in Women Code, could go a long way to lift female representation. 

Innovative approaches to enable more women to become angel investors should also be explored. For example, Marla Shapiro, founder of HERmesa, shared her angel syndication model where women can co-fund ventures with investments as small as $2,000.

2. Follow the Money

Large institutional investors and Limited Partners (LPs) should also play a more influential role by increasing their focus on diverse founders via the PE and VC firms they invest in – and be held to account. 

Triin Linamagi of Sie Ventures, which has helped companies raise £85 million in VC funding, suggests LPs should be asked to report on volumes invested in diverse founders. To encourage action on this front, LPs are being actively targeted to volunteer to sign the UK’s Investing in Women Code.

3. Create Tax Incentives

Tax incentives are used effectively in the UK to make angel investing more accessible and affordable and similar schemes could be put in place in other countries. For example, the UK’s Seed Enterprise Investment Scheme (SEIS) and its sister initiative, the Enterprise Investment Scheme (EIS), give eligible angel investors generous tax breaks – of up to 50% – on the money they invest, and are exempt from any capital gains tax on any gains. 

4. Integrate an Angel Strategy in Banks

Cultivating angel investors both among a bank’s female staff and its clients as part of a high net worth women’s markets strategy is ripe for exploration. HSBC’s Michelle Owen presented research which found that 14 percent of their high-net-worth women clients are interested in angel investing, prompting the bank to look at responsible ways to support them to do so.  Similarly, Deepali Nangia of SpeedInvest pointed out many women working in banking have the income and the know-how to be angel investors, they just need to be supported to learn about it and get connected.

As the Alliance is fundamentally focused on women’s financial inclusion, we run a Hackathon each year to support fintechs target the female economy. Previous Alliance hack winners Priti Rathi Gupta (LXME), Rachel Freeman (Tyme Group), and Mo Harvey (TRIBE Fintech) shared how the Hack helped them raise seed funding and optimize their gender-intelligent approach. This was an apt lead-in to launch of the 2024 Alliance Hack, now accepting applications until July 14.

Watch the Summit Panels: 

  1. Angels and Women of Wealth Strategy
  2. Venture Capital for Female Founders
  3. Gender Intelligent Fintech Design