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Increasing Trends in Women-Powered Business Investments

Businesses founded, led, owned, or managed by women are experiencing a significant rise in private investment; however, concerns regarding exit market dynamics could potentially pose challenges for ongoing funding.

J.P. Morgan Private Bank has unveiled its fourth annual report titled Top 200 Women-Powered Businesses, revealing a remarkable shift in the investment landscape for women-led enterprises in the UK. Since 2014, private investment aimed at businesses founded, led, or managed by women has surged dramatically, tripling to an impressive £4.01 billion as of today.

Growth in High-Growth Businesses

The company’s inaugural report in 2021 laid the groundwork for tracking these advancements, and since then, the number of high-growth businesses in the UK has escalated by a staggering 47.1%, skyrocketing from 33,300 to 49,000 enterprises. Notably, the proportion of women-powered businesses has also seen a considerable increase from 18.3% in 2021 to a significant 29.7% as of 2024.

“This surge in female entrepreneurship has undeniably transformed the UK’s scale-up scene. The dual increase in both the number and proportion of women-owned enterprises represents a critical step toward achieving improved gender parity,” stated Maya Prabhu, Market Head – UK Domestic at J.P. Morgan Private Bank.

Regional Spotlight: Wales

Among the remarkable findings, the report specifically highlights eight businesses based in Wales that have earned recognition within the Top 200 list:

• Mandarin Stone
• Dulas
• Genpower
• Unionburger
• Ron Skinner & Sons
• Parry & Evans
• Runtech
• Cultech

In terms of financial support, it is noteworthy that Wales has seen a total of £254 million in equity investment directed towards women-powered businesses from 2014 to 2023. During the same timeframe, grant funding awarded to these ventures in Wales reached £33.7 million.

Despite these efforts, the report indicates that Wales maintains a relatively small number of high-growth businesses—1,662 in total—of which 31.4% are women-powered. Traditional industries predominant in Wales, coupled with a lower population density, contribute to its comparatively fewer high-growth enterprises. Many leading companies within the region continue to operate in conventional sectors. For instance, Mandarin Stone is engaged in manufacturing stone and porcelain flooring, while Genpower specializes in supplying heavy machinery.

Trends in Private Investment

Over the past decade, investment in women-powered businesses escalated from £781 million in 2014 to £4.01 billion in 2023, and the number of deals involving these enterprises has more than doubled during this time. This rising investment trend parallels a broader movement within the high-growth ecosystem, which has seen private investment rise from £5.2 billion in 2014 to a staggering £17.3 billion in 2023.

Interestingly, the period between 2020 and 2021 witnessed a near doubling (98.6%) of equity investment value in women-led businesses, amounting to £6.90 billion, largely fueled by pandemic-related stimulus measures that enabled a significant infusion of capital into UK scale-ups.

“However, between 2022 and 2023, there was a downturn, as investment subsequently declined by one-third (33.9%), marking a notable correction following the substantial capital deployment witnessed in previous years,” Prabhu noted.

This decline reflects a broader trend across the high-growth ecosystem, where an overall 31.6% reduction in equity investment value was recorded during the same timeframe.

Venture Capital and Exit Activity

Among the top 200 women-powered enterprises featured in the report, 13.5% garnered investment from Venture Capital (VC)—a figure that surpasses the average for women-led businesses in the UK.

“Here we see a reciprocal relationship: companies with high growth potential attract VC investment, while those receiving such investment gain essential resources and incentives to scale,” added Prabhu.

However, the exit activity concerning high-growth firms in the UK has taken a downturn in recent years due to a more challenging environment. The total value of exits fell from £7.60 billion in 2022 to only £3.32 billion in 2023. Among these exits, a notable £1.15 billion acquisition involved a non-women-powered business.

“The recent downturn in exit activity reflects an extremely low liquidity environment for high-growth businesses. Consequently, companies and buyers appear to be waiting for more favorable conditions before laying out their exit strategies,” Prabhu remarked.

In comparison, the total exit value for male-powered businesses dropped by 45.3% in 2023, while the exit values of women-powered businesses tumbled drastically by 98.3%.

“This downturn raises substantial concerns for women founders, particularly those in the early stages, as many women entrepreneurs transition into angel investors and play a crucial role in supporting new female founders. Hence, this situation may create a more daunting funding landscape for women entrepreneurs in the future,” Prabhu asserted.

Sector Analysis and Need for AI Assistance

Examining the number of equity investment deals finalized in 2023, notable sectors included Internet platforms (396 deals), software-as-a-service (315 deals), and analytics, insights, and tools (303 deals), with these industries accounting for 28.1%, 24.0%, and 25.9% of total equity deals, respectively. Furthermore, the field of artificial intelligence has seen a notable emergence of women-powered firms, boasting 519 active companies.

“The data indicates a solid investor demand for women-powered businesses within the digital technology sphere, yet the number of deals closed by these enterprises remains a fraction of the overall market,” Prabhu emphasized. “For instance, women-owned Internet platform companies represented 28.1% of the total sector deals in 2023. It’s vital to increase the number of women initiating and leading technology firms to achieve greater gender equality in investment.”

Defining Women-Powered Businesses

It is important to note that women-powered businesses are categorized as high-growth companies that are either founded or led by women, have a management team comprised of at least 50% women, or are majority-owned by women. The classification of high-growth businesses typically involves meeting one of Beauhurst’s tracking triggers, such as securing equity investment or spinning out of an academic institution, indicating a company’s growth potential.

How AI legalese decoder Can Assist

In navigating the complexities of securing funding and related legal documentation, AI legalese decoder can play a pivotal role for women founders and entrepreneurs. This innovative tool simplifies complex legal language into plain English, making it easier for entrepreneurs to understand contracts, investment agreements, and regulatory requirements. By leveraging such technology, women-led businesses can ensure that they engage in informed decision-making, avoid contractual pitfalls, and foster successful partnerships.

As we continue to witness these dynamic trends in women-powered enterprises, it becomes increasingly essential to address the evolving challenges to sustain and enhance the funding landscape for the next generation of female entrepreneurs.

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