Investing in women’s business leadership makes good economic sense. This is the result of a new research study published by the European Investment Bank (EIB): Support for female entrepreneurs in Europe: Survey evidence for why it makes sense.
For its analysis, the report relies on three different surveys: the EIB Investment Survey (EIBIS) 2021, the EIBIS Startup and Scaleup Survey 2019 and the EBRD-EIB-World Bank Group Enterprise Survey for 2019 (along with the ES Follow-up Survey on COVID-19, which collected information on the impact of the COVID-19 pandemic).
Female entrepreneurs are role models for women’s empowerment and make significant contributions to the economy. Evidence shows that female-led firms are more likely to have sound management practices in place and innovative solutions, not only in the EU but also across the world.
It also shows that women-led companies achieve higher environmental, social and governance scores while supporting the upskilling of their employees more by investing in training.
However, the female workforce is under represented in the labour market and women tend to work more in part-time jobs, limiting their full potential. Female startups and scale-ups are still rare globally, with a share of female founders of 23% in the United States, 20% in the United Kingdom and 11% in the EU.
The lack of access to finance seems to be the one of their greatest obstacles. In addition, the financing is less diversified than that of their male counterpart. Female founded companies have much more limited access to the wider range of growth finance, they get public support, but this is mostly in the form of grants to get up and running.
Evidence suggests that women-led firms are more vulnerable to the effects of shocks and recessions, and COVID-19 was no exception. At the same time, many female-led firms have been resilient and have successfully adapted their business by shifting their firms online and towards new forms of product delivery, in a comparable way to male-led firms.
Stepping up efforts to achieve gender parity is needed to live up to global and EU commitments. This includes putting in place proper social infrastructure, regulations and taxation incentives so that women are not prevented from working or setting up a business in the first place.
To tackle gender entrepreneurship gaps, improving access to finance and networks is key. Financial markets and environmental, social and governance-conscious investors can further catalyse opportunities for women.
