‘Money was incredibly tight’: Female founders held back by lack of finance #NewsUnitedStates

Female founders are being held back by a lack of finance, a new report has found, amid renewed calls for more equitable investment into entrepreneurship.

Nearly two-fifths (39%) of female small business owners say poor access to finance is preventing scale-up plans according to a report by Small Business Britain, in partnership with Square and Clearpay. Nearly 60% say take out no external finance at all, with 79% using personal funds instead and 13% even resorting to using credit cards.

The difficulty is especially acute amongst ethnic minority female founders where there is a big gap in access to finance. 88% of these founders started their business with their own funds, with many reporting that finance is both hard to come by and often not seen as a viable option.

“Money was incredibly tight and there were days when I sacrificed lunch,” said Janan Leo, who self-funded her own startup as a side hustle. “Despite this, I persisted with boot-strapping because raising external investment was completely out of my comfort zone and I felt intimidated by the finance world.”

The research – which consulted more than 1,000 female entrepreneurs – revealed that a desire for greater independence is the biggest driver for women starting their own businesses, cited as the primary reason by 60% of women.

But many lack access to the right resources to attract investors, with as many as half of the women surveyed reporting that they did not understand enough about equity investment and almost half expressing suspicion over the idea of an investor owning part of their company.

The report proposes a series of early-stage interventions to boost gender inclusion and entrepreneurial success – including creating more accessible funding, producing targeted financial skills training, as well as mentoring and advice for female founders.

“From funding difficulties, to limited access to networks and resources, female entrepreneurs often encounter unique hurdles on their journey to success,” said Samina Hussain-Letch, Executive Director and Head of Industry Relations – UK, Square.

“Despite these barriers, women demonstrate resilience, creativity, fresh perspectives and unwavering determination. Now is the time to develop support, tools and solutions that help female entrepreneurs to truly achieve their full potential, enabling more growth and opportunity which will contribute to the economy.”