Real changes may be lacking, as yet, but the growth of a supportive ecosystem reflects the determination of female entrepreneurs to make a winning, positive impact

The Herald: Dr Antoinette Fionda-Douglas

 

As a female entrepreneur, I am closely familiar with the challenges we confront in our journey toward success.

This reflection coincides with the one-year anniversary of the Pathways Report, an independent review of women in entrepreneurship in Scotland by Ana Stewart. Simultaneously, it commemorates five years since the inception of The Rose Review by Alison Rose, which centred on female entrepreneurship across the entire UK.

The Pathways Report uncovered the sobering statistic that only one in five businesses in Scotland are led by women, with just 2% of overall investment capital directed towards women led start-ups. This aligns with the UK as a whole and the US fares only slightly better at 2.1%.

So, in response to these ground-breaking reports what notable changes have occurred?

First, the Scottish Government has fully embraced the findings of the Pathways report, leading to the launch of the Pathways Pre-start Fund in September. This initiative involves 19 organisations across Scotland, collectively working to address the identified issues.

Second, notable positive changes in the ecosystem, fostering awareness and support, have been noted. 

Over the past five years, as a female entrepreneur in Scotland, I’ve personally witnessed these changes.

Organisations such as the RBS Accelerator, Scottish Edge, and Women Enterprise Scotland have played a vital role in supporting my entrepreneurial journey, fostering growth, and preparing my business for future challenges.

In response to the Pathways Report, Scottish Enterprise introduced Pathways to Scale, a program in which I participated during the pilot phase alongside a network of visionary female-led companies.

The third aspect is greater transparency has also led to positive changes, with organisations required to disclose their practices and many signing up for the Investing in Women Code.

Despite increased support for female entrepreneurs in Scotland, why hasn’t it resulted in a significant improvement in achieving funding parity and equality?

Unfortunately, the existing support seems to be influencing attitudes but has not yet translated into behavioural changes to address persistent barriers, especially when it comes to societal issues like sexism, which remains a significant obstacle.

The burden of primary care and household responsibilities continues to fall disproportionately on women as they juggle these responsibilities while running a business around the clock.

Regrettably, both myself and many female entrepreneurs in my network have encountered gender biases or stereotypes throughout our entrepreneurial journeys.
According to Joan Johnston as a founder of a sustainable bedding company Ava Innes, she experienced bias, “although it was not necessarily clear if it was because I was a woman or because of the sector that I am in. Having a lead investor who is well known opens doors, that may not have opened otherwise.”

Likewise, Gemma Founder of Gut Wealth explained to me “I’ve been told by men that I’m a ‘shoo-in’ for things because I ‘tick the diversity boxes’. I called a male journalist about the changes to angel investing criteria that would impact women both as investors and entrepreneurs seeking investment and was laughed at.”

These changes to the Financial Promotions Act are no laughing matter for female entrepreneurs. As Evelyn McDonald CEO of Scottish Edge said: “These changes will have unintended consequences and really result in a step backwards in the strides that have been made in the last five years to try and address the gender inequality in funding.”

The Financial Promotions Act, with elevated thresholds for angel investors, sparks worry regarding accessibility and diversity.

At the end of January the updated criteria, hingeing on a minimum annual income of £170,000 (formerly £100k), poses a risk of narrowing the pool of eligible investors, disproportionately impacting female and ethnic minority business founders, particularly those outside the bustling streets of London.

In Scotland, this has led to a significant reduction in the number of high net worth female investors, dropping from 14,000 to 3,500.

As Ana Stewart said, there is a “severe gender imbalance in entrepreneurship and investment persists because the causes are structural and deep-rooted.  It requires engagement and action at a more profound level and across the entire landscape.” 
Last week brought forth two positive developments. First, the Treasury revealed plans to reverse investment rule changes in the upcoming spring budget.

Additionally, Ana’s campaign to address gender disparity entered a new phase with the launch of the Pathways Pledge initiative. This initiative aims to catalyse a shift in behaviours, gaining support from prominent organisations like AccelerateHER, CivTech, CodeBase, Deloitte, Eos Advisory, Scottish EDGE, and the Scottish National Investment Bank.

These organisations are committing to concrete actions, including capturing and publishing enhanced gender data, ensuring gender diversity on selection panels, increasing female participation rates, and integrating childcare into key programs.
Stewart’s contagious passion, drive, and optimism to disrupt and drive change, brings a ray of light and hope, even amid persistent historical and emerging complex barriers for female entrepreneurs. 

The Pathways Forwards Pledge is seen as another crucial building block for the necessary change to catalyse behavioural changes. This initiative has the potential to pave the way for myself and fellow female entrepreneurs to thrive and make a positive impact on the Scottish economy. 

The aspiration is not only to succeed despite challenges but to flourish because of a supportive and equitable environment and ecosystem.