Female startup founders are forced to give up a larger portion of their businesses than men in order to receive funding, according to a report released today.
JP Morgan’s Top 200 Women-Powered Businesses report found that female founders who pursue equity funding have their stakes reduced by 5.3 percentage points more than their male counterparts.
“For female-founded companies, there is a significant disparity between the equity stakes of equity-backed and non-equity-backed companies,” the report said. “This highlights that women are more adversely impacted by the dilutive effect of financing in contrast to men.
“Businesses that are led by a woman but owned by a man do not distribute wealth creation in the same way as a woman-led and woman-owned business.”
The report found that in total, companies founded or led by women raised £5.75 billion through 2,097 deals last year. But both of those figures were down from 2021, with the value of investment in female-founded businesses falling faster than for firms founded by men. However, the amount raised was almost 10 times higher than in 2013, when the report began.
London lagged behind the UK average, as women-powered startups made up 13.4% of total investment in the capital compared to 23.0% across the UK.
Challenger bank Starling, founded by Anne Boden, was named as the UK’s top woman-powered growth business.
Boden said: “We are facing a long-term, deeply entrenched disparity between the support given to male-led enterprises compared to female-led startups.
“We are also facing a bear market for high-growth enterprises and a bumpy ride for tech stocks. There is no answer as to how long these challenges will endure.
“Anecdotal evidence says women shine in crisis situations. When everything is broken, people are more willing to give something new a chance.
“But we can’t just sit back and wait for it to happen. We should all play a role in supporting that and this is the focus of the government’s women-led high-growth enterprise taskforce which I am chairing.”
