Women-led businesses secure less than 3% of funding; new report names most frequent backer

Rhona Bree (Senior Investment and Portfolio Manager) and Fraser Lusty (Managing Director)

EQUITY Gap, the Edinburgh-based angel investment syndicate, has been named as the most frequent backer of women-owned businesses in Scotland, according to a new report by Young Company Finance (www.YCFScotland.co.uk). Between 2018 and 2023, Equity Gap backed 12 equity investment rounds in female-led businesses – 30% of the total rounds during this period.

The YCF Diversity Data Report highlights the continuing disparity in investment for women-owned businesses in Scotland. In 2023, 5.4% of total funding rounds went to women-led businesses and female entrepreneurs secured only 2.6p of every £1 of funding.

Accessing investment remains a challenge for women and female-owned businesses are still underfunded; a novel approach is required. As the most frequent backer of women-owned businesses and a long-term signatory to the Investing in Women Code, Equity Gap champions an inclusive environment for investors and entrepreneurs, removing potential gender bias across the investment process. This has allowed more women to participate both as investors and founders. To date, Equity Gap members have invested over £6m directly into 13 female-led companies, leveraging £40m of total funding for these businesses. If other Scottish investors adopted this approach, it could give female-led companies access to ten times more funding.

Equity Gap’s new recent investments in female-led businesses include My SMASH Media, the AI matchmaking platform for the creative industries, and global drug research firm Cytochroma. Existing portfolio companies supported during the period include digital booking solution Appointedd and hydrogen vehicle specialist ULEMCo.

The YCF Diversity Data Report is available at https://www.ycfscotland.co.uk/wp-content/uploads/YCF-Diversity-Data-Report-2018-2023.pdf.

Commenting on the report, Fraser Lusty, Managing Director at Equity Gap, said: “The new YCF report confirms our long-held conviction that Equity Gap is at the forefront of investing in and adding value to women-led businesses. Our investment process is designed to be member-led, inclusive and accessible, allowing members to find the best early-stage investment opportunities. There is no investment committee or screening process where individual biases might creep in, which is very different to institutional investors.

“Equity Gap is proud to have supported more than 75 women investors, achieved gender diversity within our board and operating team, and is a long-standing signatory of the Investing in Women code. We look forward to working with more women-owned businesses to inject critical early-stage investment.”

Alison Grieve, Editor at Young Company Finance, said: “YCF has been tracking funding going into startups and scale-ups in Scotland for over 25 years.  We felt a responsibility to analyse that data through the lens of diversity, specifically the individuals who own and control these companies.  Although the overall results revealed continuing disparities in funding allocation, it was encouraging to discover that Equity Gap was the most frequent backer of women-owned businesses, as a member-led group of investors that has been backing women-owned businesses from its first year of formation.”

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