tech2035 opinion - Any successful policy moment must recognise the role that women play in the economy

The Spending Review and modern industrial strategy mark historic moments that will define this parliament and the rest of the decade. But if the next few weeks have any hopes of providing a ‘launchpad for businesses’, actions must better support women in the economy – placing them front and centre to provide the certainty that inspires active participation.

This shouldn't be a question, or a hard choice. If women started and scaled their businesses at the same rate as men, it could unlock £250 billion for the UK economy.

The gender disparity in business funding reveals a striking imbalance. Female entrepreneurs received less than 2% of the UK's multi-billion-pound venture capital investments in 2022, while women-led businesses typically secure bank loans averaging only one-third the size of those granted to male-led enterprises. This funding gap is perhaps most starkly illustrated by equity investment data: for every pound invested in UK businesses, merely 2p reaches fully female-founded companies. The fact that 55% of female founders say they face heightened scrutiny because of their gender is not good enough.

Within the UK tech sector, the problem is even more stark, and I personally have felt consistently frustrated by the recent lack of women in the ‘room’, on panels or being given the opportunity to lead reports.

BCS research demonstrates that efforts to diversify the tech workforce have seen less progress over the past five years than hoped. Women represent only 21% of IT specialists in the UK—a significant underrepresentation given that women comprise 51% of the working-age population. This persistent underrepresentation highlights a significant missed opportunity to harness the full breadth of talent and potential within the UK.

But the case for diversity is clear. Research consistently demonstrates that diverse teams are more innovative, make better decisions, and excel at problem-solving. McKinsey’s Diversity wins report revealed that companies in the top quartile for gender diversity in executive teams are 25% more likely to achieve above-average profitability.

Last year, the first female Chancellor of the Exchequer Rachel Reeves delivered the Autumn Budget, marking a historic moment. The budget recognised ‘women in the economy’ and outlined measures to drive change. This included childcare reform, support for the Invest in Women Taskforce’s mission and greater investment in women’s funds from the British Business Bank. While promising, the hope should not be for women to receive their own ‘box’, but to embed diversity (whether age, disability, gender, ethnicity) across all government policy from the onset. This is important for all aspects of the policy ecosystem – whether policy to better deliver funding, support digital upskilling or improve the wider investment environment.

The UK has the potential to be the world’s leading hub for women and diverse leaders to build a tech business. To get there, I outline three actions the government should take.

1. Build the data and evidence base to better understand how to make the right interventions to support diverse founders, and to build a stronger evidence base to make the case for change.

In its role as a convenor, the government could act right away to improve access to data collection on growth businesses. This should be led by the Office for Equality and Opportunity working with HM Revenue & Customs and Companies House.

Alongside this, the government should work to provide statistics on returns offered by diverse-founded businesses at each growth stage, encouraging investment into female and ethnically diverse-led scale-ups. As Beauhurst highlights, a lack of robust diversity data - spanning gender, age, and nationality - limits the ability to address systemic inequities, although anecdotal evidence strongly points to underrepresentation.

There are existing sources that are making an impact and monitor progress in female founders and entrepreneurs. These include The Gender Index, which monitors the representation of women in high-growth sectors, such as the tech sector, and Investing in Women Code, which tracks the proportion of venture capital and private equity funding allocated to female-led businesses. But the UK Government has a vital role to play to ensure consistency, track progress and close the gender and diversity investment gap.

2. Prioritise targetted support, including reduced investment thresholds and mentorship programmes.

World-leading tax incentives like Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) remain critical for women entrepreneurs and tech sector participants. Early-stage investors tend to be more interested in those companies that qualify for SEIS and EIS due to the attractive tax breaks whilst supporting high-growth UK companies. The government should continue to track women founders, investors and entrepreneurs’ engagement in schemes. Better promoting and sharing the value of schemes through a government-led campaign would provide immense value for women entrepreneurs. This should bring together key ecosystem players and networks to drive more uptake among women entrepreneurs.

The government backed Science and Technology Venture Capital Fellowship programme, a 12-month fellowship, seeks to fast-track the growth of UK-based venture capital investors in the UK with a focus on science and tech. Demonstrating a tailored support offer, the programme involves knowledge sharing, leadership development, hands-on learning and mentoring (particularly in deep tech and life sciences). To drive more diversity into the ecosystem, the government should continue the programme and place greater emphasis on supporting next generation female and ethnic minority leadership. This could be done through a cap or certain eligibility criteria to participate in the programme.

Finally, the Investing in Women Code is a government led initiative designed to improve access to tools, resources, and finance for female entrepreneurs. It is a voluntary partnership between government and finance providers. Going forward, the government should make the Code mandatory for all public organisations that finance entrepreneurs. This will increase the transparency of financial services firms’ data and drive better adoption of internal practices for women entrepreneurs.

3. Deliver on the AI Opportunities Action Plan, exploring school-based initiatives that have successfully improved diversity across other industries.

It was encouraging to see that the government acknowledged the importance of expanding the diversity of the talent pool in its AI Opportunities Action Plan, highlighting that only 22% of professionals in AI and data science are women. A welcome step, the plan also recommends exploring school-based initiatives that have successfully improved diversity in other industries.

Schools based initiatives could include tech specific hackathons and competitions. Research has shown hackathons enhance real-world problem-solving skills and make learning more engaging and practical. Ensuring female involvement in these within schools would help create a pipeline of tech literate and savvy talent.

Ultimately, the government must continue to partner with business to maximise and enhance women’s contribution to the economy. This is crucial not only to unlock the full economic potential of the tech sector and wider economy but also to inspire the next generation of women tech leaders. I for one feel more inspired when I hear or read diverse perspectives.

techUK, on behalf of our members, continue to advocate for better diversity within the tech sector, including through our Tech Together Campaign. We believe that supporting individuals from all backgrounds is a collective responsibility and essential for a more equitable future.

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