Janvi Patel is a lawyer and entrepreneur who founded alternative law firm Halebury. In this article, she explores what more the UK could be doing to nurture its female tech entrepreneurs.
It has been reported that UK entrepreneurs (or “makers” as they are now known) could contribute about £18bn to the UK economy, or even more. RBS estimates that boosting female entrepreneurship would contribute £60bn to the UK’s economy, yet the Office for National Statistics states that women only account for under a third of entrepreneurs in the UK generally, and the tech sector fares even worse with only 20% of tech businesses being founded by women.
It is obvious we need to support our tech makers; not just because they are willing to take the market to the next level – they already stick their necks out – but from a pure economic basis, they are the backbone of our society and economy.
As a female entrepreneur myself and one whose business advises a range of tech start-ups and companies, I have seen first-hand why the entrepreneurial path is challenging and particularly for women. My personal opinion is that the UK could be doing a lot more to nurture its female tech entrepreneurs. As I see it, four possible solutions the government could offer are as follows:
1. Improve access to finance
Most entrepreneurs will tell you access to finance is an issue. This is because the majority of access to finance has been left to banks, angels and VCs. I recently read a phrase “when banks say no, entrepreneurs get creative with financing” and this means with credit cards, crowd funding and family as sources of finance.
Due to restrictions within our profession, we could only turn to banks when we started Halebury, but banks appear to have limited appetite to fund start up businesses. This meant the only finance we were offered was ‘matching financing’, which meant that if we personally placed a certain amount of funds with a bank (attracting base interest rates), the bank would loan the same amount to the company at around 10% interest.
Tech companies do better with funding, but the market to obtain funding is still touch and go, especially if the founders and their team want to retain control and the majority of shares.
2. Introduce statutory maternity pay for entrepreneurs
Even when we started trading and generating income, while I was subsidising the company to get it up and running, I was also trying to support our family’s cash flow. When I had a baby, I only took a few weeks off before returning to work as many entrepreneurs do, but the fact I lost all my statutory maternity pay (SMP) rights was a big issue and is a big deterrent for many female entrepreneurs. Surely, if we want to encourage entrepreneurs, access to SMP if you have contributed over a longer period of time is good way ensure they still have cash flow?
3. Offer a leg-up on the property ladder
Many entrepreneurs will tell you it is hard to obtain a mortgage. Not being able to get on the property ladder because we are shareholders, directors and employees – rather than just employees – has a major impact on families.
The mortgage system is structured to assist employees, but not business owners. One logical change could be for the company and personal accountant to verify that the business and its leaders are “viable” and can afford repayments. This means you might need a track record of between two and four years, but that is better than a straightforward “no”.
4. Launch entrepreneur saving schemes
Maybe the answer is helping individuals save for such an event, similar to the tax-free saving funds that many people use or a pension scheme – perhaps in the form of an entrepreneur fund, or even a choice on how we allocate our NI contributions. No one is expecting state money or benefits, but a saving programme that enables tech founders to make a decision regarding how they want to use their money would support and encourage entrepreneurship.
The facts are clear: we need to encourage more female entrepreneurs as they are key to our economy, but if we want more women founders in technology we must look at what is preventing them from joining the entrepreneurial club.
We need to ensure the right systems are in place to encourage and support those who are taking the risk. There will always be risk for tech entrepreneurs, but they should not have to stake their entire life on it.