Female entrepreneurs in the UK made £8.2bn from selling their businesses last year*, according to new data obtained by Bowmore Wealth Group.
However, the money made by female entrepreneurs exiting their businesses is just 24% of the total value of UK business sales. The sale of male-owned businesses generated £25.3bn over the same period – three times as much (based on HMRC data on sale proceeds from exits).
Bowmore says that the disparity between the amounts made by male and female entrepreneurs suggests that female entrepreneurs face greater barriers to accessing venture capital and private equity backing, than men.
That disparity might extend through the availability of debt finance. For example, only 40% of the British Business Bank’s start up loans were lent to women-led businesses, despite the bank’s ambitions to narrow the funding gap**.
One example is Kate Prince, who managed to receive £7m in funding for her wellness brand Ancient + Brave, but stresses that too many women are locked out of such capital funding. Research from the Investment in Women Taskforce found that only 1.8%*** of equity investment in the UK went to female-founded businesses last year.
Says Gill Millen, MD of Bowmore Financial Planning: “It’s positive to see so many female entrepreneurs now building and selling high-quality companies. However, many female entrepreneurs report that the playing field is still not level.”
“The situation is improving, but not quickly. Even when there is a concerted effort from organisations to improve the funding gap.”
“The reality is too many brilliant female founders are shut out of growth capital and that’s a barrier to growth for the whole UK economy.”
Millen says that even when female entrepreneurs successfully exit their businesses, they still face a subtle bias such as in their ability to gain non-executive positions at companies or even in the advice they receive on reinvesting the money they make from exiting their business.
How they invest that money is very important as many entrepreneurs underinvest in their pensions with the aim of funding their retirement out of the sales proceeds of their business.
Adds Gill Millen: “One of the key challenges facing successful entrepreneurs – male and female – is how to sensibly reinvest the proceeds from a business sale to provide for their retirement. However, research suggests that women are less likely to seek advice on investments than men, partly because there are a far lower number of female financial advisers than male.”
“If female entrepreneurs are not getting the right levels of financial advice and are not being advised on the right, tax-efficient investment strategies then that is really going to impact the quality of their life once they sell their businesses.”
*Year end April 5 2023, most recent year available
**British Business Bank’s Annual Report and Accounts 2024
*** The Invest in Women Taskforce 2024
