The findings are taken from the 2023 Startups 100 entrants index in which 244 of the UK’s newest small businesses entered to be named the most disruptive and innovative venture.
From this, it was revealed that on average, female-founded businesses received £763,300 ($934,355) compared to £4.7 million ($5.7 million) for companies that were solely male-owned.
Women also make up just 15% of the decision-makers in the UK venture capital industry, emphasizing how the lack of gender diversity at all levels can create a ripple effect.
Other main types of startup funding—angel investment and private equity—also show a clear favoritism towards male-owned businesses. Around 32% of male-led businesses received angel investment compared to 22% female-led, whilst 16% of male-led businesses received private equity funding compared to just 6% female-led.
Without VC and third-party funding, half of women-led businesses are self-funded, compared to 32% of male organizations.
With self-funded businesses more likely to fail, according to Startups.co.uk, there becomes a negative cycle and attitude towards female entrepreneurs.
Yet, despite the disproportionate gender gap in funding, female entrepreneurs contribute £3.51 billion ($4.29 billion) to the UK economy every year.
Although, according to the Rose Review, that figure could potentially reach £250 billion if investment in small businesses was equal for both men and women.
The UK startup scene isn’t alone in its representation of the gender gap in business. The gender pay gap is still very much rooted in society. In the US, for example, women earned an average of 82% of the amount that men earned in 2022.
The good news is business schools are committed to empowering female business leaders by increasing gender parity on their programs, offering scholarships especially for women, and preparing women in business with the skills to tackle male-dominated industries.