Embracing Entrepreneurial Equity: progress, challenges and can we ever shift the dial?
Professor Eleanor Shaw OBE, provides an overview of the recently released independent review into women in entrepreneurship in Scotland, 'Pathways: A new approach for women in entrepreneurship'. She reflects on the data and recommendations provided in the review, and highlights the need to do more, collaborate more, and engage in wider data analysis to truly ensure that we #EmbraceEquity for all of Scotland’s entrepreneurs.
International Women’s Day 2023 calls on us to #EmbraceEquity and to ‘imagine a gender equal world. A world free of bias, stereotypes, and discrimination’. This sounds good, great even, but as I consider this from the perspective of figures published in 'Pathways: A new approach for women in entrepreneurship' – an independent review into women in entrepreneurship in Scotland, I realise we remain a long way from achieving equity when it comes to founding and leading entrepreneurial ventures. Researched and written by Ana Stewart - founder of IT firm, i-design (acquired by the US-based ATM group Cardtronics in 2013), partner with the investment firm, Eos Advisory, and NED of the Scottish Football Association - and Mark Logan, previous COO at Skyscanner and now Chief Entrepreneurial Advisor to the Scottish Government, the report does not shy away from the very real challenges faced by women entrepreneurs in Scotland. Instead, it informs us of a lack of equity concerning entrepreneurship in Scotland.
Using a robust mix of quantitative data about women-led businesses (freely available to all on The Gender Index - an amazing 'hub' of empirical data dedicated, for the first time, to women founders), and qualitative data collected during interviews, focus groups and round tables with female founders and others critical to Scotland's entrepreneurial ecosystem (policy makers, financiers, venture capitalists, etc), the report shines a stark light on women's low levels of participation in business ownership in Scotland and highlights reasons for this.
As someone who has been researching women’s enterprise for more than 2 decades, and has worked with numerous female founders supporting the start-up, sustainability and sometimes growth of their ventures, the reports finding’s and its 31 recommendations to boost women’s participation in business ownership were met, in equal measure, with a heavy heart AND a sense of anticipation that something positive might happen. The possibility that the dial might shift through cross-sector collaboration and joined up thinking to create an inclusive entrepreneurial ecosystem that embraces equity and provides female founders, indeed all under-represented founders, with equal access to all of the resources and support needed to set up businesses that can thrive, is an exciting and real possibility. What it now needs is for the Scottish Government to support the report’s recommendations in the same positive manner it responded to the Scottish Tech Ecosystem Review (STER), also authored by Mark Logan. It also needs all of the institutions and actors important to entrepreneurship in Scotland to come together, to collaborate and to act on the recommendations made.
To address these enduring obstacles and to grow female participation in entrepreneurship from such low levels requires ambitious recommendations and a systems approach in which all key institutions and actors collaborate.
The report informs us that female-led firms accounted for only 1 in 5 or 20% of all firms incorporated in Scotland in 2022. Looking at the number of female-led businesses as a proportion of the total number of businesses in Scotland, the figure is even less inspiring: currently 16.06% of active firms in Scotland are women-led, slightly lower than the UK figure of 17.65%. These figures are echoed by the most recent Scaleup Index (Nov. 2022) which shows that only 16% of all visible UK scaleups have at least one female founder and that this low figure actually represents an increase of 30% since the 2020 Index.
Sadly, this situation is not new. Professor Tom Cannon recently reflected that since he and my colleague Professor Sara Carter published 'Women as Entrepreneurs' in 1992, despite growing research and policy interest in women as entrepreneurs, the same low levels of participation have endured. While the number of UK small firms has grown significantly from around 2.5M in 1992 to currently just short of 5.5M, most of which (99.2%) are small (0-49 employees), across these 30 years, at any given time, only between 15-17.6% have been women-led. Surely now is the time to #EmbraceEquity are address the reasons for such low levels of participation?
The Pathways Report helps us understand factors that contribute to these consistently low levels of female participation in entrepreneurship. For example, it highlights the multiple demands on women - work responsibilities, caring responsibilities, domestic management responsibilities, family responsibility etc. - which can be difficult to combine with the intensity of starting up and growing a business. It also recognises the challenges which women, and others under-represented in business ownership face when accessing the often ‘invisible’ networks within which entrepreneurship ‘happens’, and the nuanced challenges they encounter including not being taken seriously and not being identified by others as a ‘credible’ entrepreneur. Like the Rose Review which was first commissioned by UK Treasury in 2019 and led by Alison Rose, CEO NatWest Bank, the report highlights the significant challenges women-led ventures face when it comes finance. Over the last 12 months or so, across all sectors, female-led businesses made up just 12% of companies receiving investment while male-led firms accounted for 73% - a whopping 61% gender gap.
To address these enduring obstacles and to grow female participation in entrepreneurship from such low levels requires ambitious recommendations and a systems approach in which all key institutions and actors collaborate. There is no ‘silver bullet’ to growing a more diverse and inclusive entrepreneurial community. Recognising this, the report sets out a series of 31 recommendations which should be regarded as an integrated set of actions, ALL of which must be implemented if we are to achieve the system-wide change needed for Scotland’s economy to reap the economic, social, community and sustainability benefits that wider and more participation in entrepreneurship will create. Recommendations including the introduction of a Concept Fund to support early-stage ventures and a Journey Fund for those with more developed businesses will create a more equal playing field by addressing the critical early-stages of venture creation and development during which many females and others under-represented in Scotland’s entrepreneurial community, ‘drop out’ of the process due to a lack of access to entrepreneurial finance rather than the absence of a compelling proposition.
So where do we go from here?
This report, together with the Rose Review, the Gender Index, the Investing in Women Code, and the Women Entrepreneurs Finance Initiative led by the World Bank, together with many other conversations and initiatives are important and timely. They are recognition of the very real and unique challenges faced by women as entrepreneurs and of the need for a systems-wide approach to unlock and realise the significant potential of women-led firms to contribute to the economic, social and well-being health of Scottish and UK economies.
Looking forward, we need more and better data to understand who engages in entrepreneurship, and who is under-represented. The Gender Index (2022) shares this ambition to ‘create a fairer future by providing a clear picture of the UK company landscape’ by providing freely accessible gender disaggregated information via their website. This report too recommends more and better data about the demographics of our entrepreneurs including their sex and ethnicity and recommends establishing a comprehensive data platform to track progress towards full representation in entrepreneurship. With access to such data we can develop a process of continuous improvement and, like the evidence-based recommendations included in this report, continue to use data and evidence to inform how we can widen greater participation in entrepreneurship across Scotland.
Only by working together can we create in and for Scotland an entrepreneurial ecosystem which equalises entrepreneurial opportunities for all and makes it possible for all entrepreneurs regardless of age, sex, sexuality, ethnicity, religion, disability, location, or sector to create and grow new ventures that contribute economically, socially, and environmentally. Creating this type of environment throughout Scotland is good for business and is good for the citizens of Scotland. To know this and yet do nothing or do too little is irresponsible. By not taking the actions necessary to equalise the entrepreneurial playing field, we are complicit in maintaining out of date norms, cultures and behaviours and we are severely letting down the talent, ambition, and purpose of our young people and of our children to come. It’s time for us to #EmbraceEquity for all of Scotland’s entrepreneurs.
An edited version of this blog has been published as an article in the Scotsman.
