THE number of female-led companies in Scotland has risen, according to the annual large-scale UK-wide study into female entrepreneurship.
Scotland maintained its status as having one of the highest proportion of fast-growth female-led companies in the UK, only second to Wales (12.1%).
There was a modest increase in the proportion of incorporated female-led companies in Scotland, from 19.16% in 2021/22 to 19.4% in 2022/23.
Created by the leading data analytics platform mnAi, The Gender Index is an AI-powered research of all 4.5 million active companies which accurately measures the number of female-led companies and their impact on the economy.
An added layer that the mnAi analysts have incorporated into this year’s data is identifying company leadership among underrepresented groups and young people.
Much more work remains to be done to level up Scotland with the rest of the UK in terms of female-led companies headed up by ethnic minorities. Ethnic minority female-led companies account for 22.9% which equates to 3.5% of all companies in Scotland – much lower than the UK average of 6.6%.
Jill Pay, chairman of The Gender Index, said: “For the second successive year, The Gender Index has shown an increase in the number of women across the four nations that are setting up companies, which is a further step in the right direction in boosting female entrepreneurship across the UK. More young women and ethnic minorities are raising external capital and leading female-owned companies than ever before, reflecting our belief that everyone regardless of age, race or gender should not face barriers to starting a business.
“We recognise that while inspirational women are accessing external capital and leading fast-growth companies, we will not rest until every female-led company can do the same. To that end, The Gender Index is an accessible and informative tool that offers an unparalleled view of the progress and challenges that female-owned companies face today.
“We want The Gender Index to be used by policymakers, local and national government, corporates, researchers, investors, educators and female entrepreneurs to move the needle and support a more diverse economy.”
Accessing external funding remains a challenge for female-led companies. The proportion of female-led companies securing external capital out of all companies in Scotland was 3.9%. This is higher than the East Midlands (3.67%), similar to Yorkshire (3.81%), but behind the UK as a whole (4.14%), the rest of the UK (4.16%) and England (4.16%).
Significantly, female-led companies grew turnover on average higher than men. For 2022/23, female-led active companies in Scotland grew turnover on average by 19.9%, compared to 18.6% for male-led companies. Female-led turnover growth in Scotland is higher than in the South West (19.4%) but was below the overall UK average of 22.08%
John Cushing, CEO of mnAi said: “The ethos behind The Gender Index is our firm belief that data can drive positive change for women in enterprise to identify challenges and opportunities and stimulate the growth of female-led companies.
“We strive for diversity and have widened the net this year to also focus on ethnic minority female-led companies and the most represented and under-represented generations in entrepreneurship. From our analysis, it is heartening to see Generation Z female founders closing the gender gap.
Cushing added: “This research also highlights the ongoing challenges for female-led companies accessing external capital. While it is clear from our data that there is still a long way to go, we look forward to seeing what other trends emerge over the coming year as we continue to push for positive change through data.”
Key findings
Scotland
- Scotland has the second highest proportion of fast-growth female-led companies across the UK after Wales (12.1%).
- For 2022/23, there were 228,477 active companies in Scotland of which 36,210 (15.8%) were female-led. This is among the lowest of the UK nations.
- In Scotland, we find that 19.2% of younger female-led companies (Millennials and Generation Z) secure external capital compared to 14.2% for Generation X and 12% for Baby Boomers.
- For 2022/23, female-led active companies in Scotland grew turnover on average by 19.9%, compared to 18.6% for male-led companies.
- There was a modest increase in the proportion of incorporated female-led companies in Scotland, from 19.16% in 2021/22 to 19.4% in 2022/23. This increase accounted for 4.2% of all UK female-led incorporations and just under 1% of all UK incorporations.
- In 2022/23, 25% of active, female-led companies in Scotland accessed external capital. While this share is higher than the UK average, it equates to only 3.9% of all companies in Scotland.
- New incorporation rates were better among females with a slight improvement between 2021/22 and 2022/23. This is consistent across UK regions and means that for every one female-led company, there are four male-led companies
- in Scotland. For every three female incorporations in Scotland in 2022/23, there were 10 male incorporations. This translates to a 5% growth in female-led companies compared to a 1.5% growth in male-led companies.
- While female-led growth rates are higher, with these rates it would take around 40 years to approach gender parity in the stock of active companies.
- Women’s engagement with enterprise is not limited to female-led companies. Women are also involved in the ownership of family companies which involve ‘mixed leadership’. In Scotland, 18.3% of all companies are mixed-led compared to the UK average of 16.3%. This is a slight decrease from 2021/22, where the proportion for Scotland was 18.4%.
- The proportion of female-led companies securing external capital out of all companies in Scotland was 3.9%. This is higher than the East Midlands (3.67%), similar to Yorkshire (3.81%) and below both London (4.81%) and the South West (4.16%). Scotland was also behind the overall UK (4.14%), the rest of the UK (4.16%) and England (4.16%).
- In 2022/23, 10.75% of all active EIS qualifying companies in Scotland were female-led. Scotland has a higher proportion than the East Midlands (7.80%), North East (8.18%), South West (9.39%) and Yorkshire and the Humber (9.68%) but a lower percentage than Wales (15.83%), the UK overall (10.98%), the rest of the UK (10.99%) and England (10.89%).
- For 2022/23, female-led active companies in Scotland grew turnover on average by 19.9%, compared to 18.6% for male-led companies. Female-led turnover growth in Scotland had a higher rate than in the South West (19.4%) but was below the overall UK average of 22.08%. The best-performing regions were London (29.1%), the North East (24.5%) and Wales (24.1%).
