ACCELERATING ACTION: THE GENDER FUNDING GAP

Over the past few decades, the UK has established itself as a global hub for venture capital and is now the third largest VC market, ranking only behind the US and China. 

Although there has been a growing emphasis on diversity within the VC space, with an increasing number of funds and initiatives being established to support female entrepreneurs and women-led businesses, there is still a long way to go. 

Female-led startups in the UK continue to receive a much smaller proportion of VC funding relative to male-led startups:

• only 3% of VC funding goes to all-female teams;[1]
• male founders receive on average 5.9x the amount of early-stage VC funding as female founders;[2]
• on the investor side:
  • only 20% of the workforce in VC firms are women;[3] and 
  • male angel investors outnumber their female counterparts by more than 200%.[4]

In line with 2025’s International Women’s Day theme, Accelerate Action, throughout March we will be spotlighting some inspirational women to both celebrate their successes and provide inspiration and advice to future female entrepreneurs and investors. 

How Can the VC World Accelerate Action?

1. Encourage more women to pursue entrepreneurship. 
A historic lack of funding in women-led businesses means that investors are missing out on opportunities to generate returns. In 2019, the Alison Rose Review of Female Entrepreneurship (the “Rose Review”) highlighted that the UK economy could gain up to £250bn of new value (equivalent to 1 million SME businesses) if women started and scaled new businesses at the same rate as men. The 2023 Rose Review Progress Report found the number of female-led businesses had doubled between 2018 and 2022,[5] but highlighted further work is required with promoting greater transparency and expanding opportunities for women in UK funding, launching new investment vehicles, and increasing access to support networks and mentors, being key in helping female-led businesses access capital. 

2. Increase funding allocated towards female-led businesses. 
Access to capital is one of the biggest barriers for all entrepreneurs, and this struggle is greater for female-led businesses.[6] As such, increasing awareness of untapped talent and sharing success stories are simple but effective methods of challenging unconscious biases. The launch of investment vehicles with mandates to invest in female-led businesses is also key.

3. Encourage more women to invest. 
Thanks to factors like affinity bias, men tend to invest in other men, but this can work both ways, with female investors twice as likely to invest in female founders. Positive externalities of having more female investors in the VC space could lead to outcomes such as female founders receiving fairer valuations for their businesses, as well as more mentorship opportunities from female angels.

4. Initiatives. 
Many initiatives already exist with the aim of closing the funding gap and increasing women’s participation in VC for founders and investors alike. These include:

(i) The Invest in Women Taskforce was launched following the Rose Review’s findings, with the aim of creating the world’s largest investment pool of £250m for female-led and mixed businesses. This target was exceeded with sign-ups from major investors including Barclays, M&G, the British Business Bank, Morgan Stanley, Visa Foundation, BGF and Aviva. The Women Backing Women Fund is intended to be deployed this summer.

(ii) As an additional response to the Rose Review’s findings, the UK Government launched the Investing in Women Code in 2019, with the purpose of encouraging VC funds to direct their finance to female entrepreneurs to help remedy the funding gap. Key commitments of the code for member organisations include requirements to:

• nominate a senior leader responsible for promoting equality in access to finance; 
• provide data on their support for female entrepreneurs; and
• adopt practices to improve female entrepreneurs’ access to finance, resources and tools.

(iii) Innovate UK: Women in Innovation Awards was launched in 2016 to encourage female founders to apply for funding opportunities after research identified the lack of access to funding as the biggest barrier to success for female innovators. We are incredibly proud that one of the winners of the Women in Innovation Awards 2025 was our client, Jane Pearce, of Rockwood Operations. 

(iv) The BVCA Inspirational Women Award was launched in 2024 to celebrate the successes of current female founders backed by private capital who have led and exited high growth businesses, whilst simultaneously inspiring the next generation of female innovators and providing them with role models to look up to. 

(v) Following the findings of the Gender Export Gap Report, which identified that Scotland could boost its economy by £3.4bn to £10.3bn over a two-year period if female-led businesses exported at the same rate as male-led businesses, various measures have been introduced focussing on trade missions and export training programmes to help female-led businesses attract more international investment. 

In addition to these initiatives, there are multiple private support networks available for networking and advice-sharing, including Burges Salmon’s BEntrepreneurial - The Female Forum.

Upcoming Series 

Burges Salmon is proud to be connected with many inspirational women and will be showcasing a selection of these women and their work throughout March in our upcoming series. 

We hope to accelerate action by sharing role models, inspiring the next generation of female entrepreneurs, and demonstrating the potential and impact of investing in female innovators and female-led businesses. 

If you would like to discuss any of the points raised in this article, please get in touch with your Burges Salmon contact or the Emerging Companies Team on [email protected]. In addition to providing legal advice generally to start-ups, scale-ups, founders, and investors, we deliver legal advice to early-stage companies through the firm’s legal accelerator: BScale, with the aim of supporting early-stage businesses in scaling up their operations by providing corporate, regulatory, tax, employment, IP and commercial advice. 

Written by Eleanor Furlong and Joanna Gray.

[1]BVCA-Venture-Capital-in-the-UK-Report-2024.pdf

[2]The State of the Gender Funding Gap in 2024 - Startups.co.uk

[3]Investing in Women Code Annual Report 2024 - GOV.UK

[4]thewomensorganisation.org.uk/wp-content/uploads/2024/03/TGI-2024-Report.pdf

[5]004341_Rose_Review_Report2023_DIGITAL.pdf

[6]thegenderindex.co.uk/uploads/Reports/TGI-2025-report.pdf