“I want the UK to be the best place for anyone – male or female – to start and grow a tech business, so it’s brilliant to see female-founded firms attracting more investment than ever before,” said Michelle Donelan, Foreign Secretary for Science, innovation and technology. Donelan joined UK Prime Minister Rishi Sunak earlier this month to launch a 10-point technology framework, which included a £10m boost to the UK Innovation and Science Seed Fund (raising it to £50m) to grow future tech giants. But building the next generation of tech companies also means addressing the gender gap. “STEM remains a male-dominated field, both in the labor market and in universities,” warns a recent report by the World Economic Forum. Research conducted by Dealroom (a global provider of data and intelligence on start-ups and technology ecosystems) on behalf of the Department for Science, Innovation and Technology shows that VC funding raised by women-founded firms is on the rise. But the gender gap remains in the venture-backed tech sector, with female founders represented in just 9% of UK unicorns.
The Dealroom analysis, which focuses on the UK tech scene, shows that fintech companies make up the majority of VC funding going to women-founded firms. Looking at the top 10 rounds for UK start-ups with at least one female founder or co-founder, almost 70% of funding (GBP 1.989 billion) centered around fintech. Energy was the second largest VC funding sector for women-founded firms in the study. Examples listed include Nyobolt (GBP 50 million) – a start-up developing end-to-end ultra-fast charging battery solutions – and Hydro Wind Energy (GBP 44.5 million). Over a third of Hydro Wind Energy’s senior team are women, and the cleantech firm – which has offices in London, San Francisco, Dubai and Ireland – builds systems to gather low-cost energy from the ocean.
Female founders have a big impact in other sectors too. According to the Dealroom data, almost 200 start-ups (tech firms developing solutions that address the UN’s Sustainable Development Goals) were founded by women in the UK. And together these women-founded companies employ more than 8,000 people. But as highlighted, when it comes to firms with $1 billion plus valuations (the so-called unicorns), there is still work to be done to embrace talent more broadly. “The vast majority of startups and funding continue to go to all-male teams,” comments Yoram Wijngaarde, founder of Dealroom. “By focusing on this metric and on upskilling talent across the digital technology sector, we should be able to make a difference.”
Addressing gender gaps and diversity issues
The study reports that only 13 of the UK’s 144 tech unicorns have at least one female founder, which – as noted – represents just 9% of the total and shows missed opportunities. At face value, this is not good news for a country focused on growing future tech giants. And to maximize the chances of success, the UK government is supporting a number of initiatives designed to tackle the gender gap and diversity issues facing the tech sector.
A first step for UK firms looking to improve the chance of tech success, which is inextricably linked to having a talented workforce, is to sign up to the Tech Talent Charter (TCC). The UK Government has supported the TCC since 2016, and the industry-led membership group aims to equip signature organizations (of all sizes, from start-ups to multinational firms) with the networks and resources to drive diversity and inclusion. On its website, the TCC highlights that failing to address gender gaps and diversity issues comes at a cost to UK businesses – “With an estimated 870,000 vacancies in digital and technology in the UK, it is clear that we are not attracting and including all available talent . . .
McKinsey, a global consulting giant, points out that the business case for diversity, equity and inclusion (DE&I) is stronger than ever. McKinsey analysts have tracked industry trends across a range of reports since 2015, surveying more than 1,000 large firms based in 15 countries, providing a valuable perspective on issues around the world. Interestingly, while average figures suggest that progress in the development of DE&I may seem slow. The story is quite different when you look at performance company by company, which reveals two categories of firms. First, there are organizations that do extremely well, especially at the executive level, based on McKinsey findings. And then there are the companies that are missing opportunities and, in the language of the report, ‘should take far bolder steps to create a long-term inclusive culture and promote inclusive behaviour’.
In the UK, businesses with 250 or more employees must report their pay gap data, which is published online. There is also the upcoming EU directive on pay transparency, which may eventually apply to EU organizations with 100 or more employees. But companies don’t have to wait until they pass this threshold before taking action. In fact, there are many digital tools that smaller firms such as startups can use to ensure that their employees are fairly rewarded for their efforts. Figures, a salary measurement company, has a practical 6-step guide for companies that want to get ahead by reducing the gender pay gap. And an equality index offered by French provider CompTech makes it easy for firms to compare their progress with similar organizations in the UK and across the EU.
