NatWest boss warns city investors that they are abandoning “a generation” of women entrepreneurs by not offering them access to finance
The head of NatWest has warned that city investors are failing “a generation” of women entrepreneurs by failing to raise the money to get their businesses off the ground.
Alison Rose, who became the first female director of a major UK bank in 2019, said access to finance was the “highest barrier” holding back women entrepreneurs in the UK.
Research shows companies started by women only get 1p for every £ 1 of venture capital invested in the UK.
Concern: Alison Rose said access to finance was the “highest barrier” for women entrepreneurs in the UK
Rose told The Mail on Sunday, “Venture capital is meant to invest in companies of the future, so I know that encouraging the investment community to support UK women entrepreneurs and founders will make a real difference.
“Access to finance is the single greatest opportunity and the biggest obstacle we need to remove.”
Rose has already taken steps at NatWest to close the gap. The MoS estimates that NatWest’s private banking arm, Coutts, is on the verge of raising £ 40 million from wealthy clients to support women-run businesses.
Coutts, who counts the Queen as a customer, plans to raise funds through its UK Enterprise Fund, which it has set up in partnership with BGF, an investment company that manages £ 2.5 billion.
A flood of companies was launched during the pandemic by people who have lost their jobs or have made a career change. According to the think tank Center for Entrepreneurs, 772,002 companies were founded at a record high last year.
However, there is growing concern that too many startups are relying on credit to fuel their growth rather than raising capital from investors.
Companies have borrowed cheaply because of record-low interest rates. However, heavily indebted companies are more likely to collapse when money runs out, and refinancing can become expensive once the debt expires.
Many small businesses also turned to government emergency programs during the crisis, including “repaying” loans worth up to £ 50,000 each. Approximately £ 46.5 billion in bounce-back loans have been raised, keeping taxpayers on the hook in the event of a business failure.
Rose warned that growing businesses will need equity financing from well-funded investors to survive – and thrive – beyond the pandemic. She said, “Many small and medium-sized businesses are relying on debt to weather the current crisis.
“That may be necessary in the short term, but in the long term, growth-oriented companies need other options in addition to loans – options such as equity financing. Successful growth requires the right capital structure.
“If we do not create the right financing structure for the growth economy, we will abandon a generation of entrepreneurs.”
Rose has been hired by the government to review the state of female entrepreneurship in the UK.
In her 2019 Rose Review, she noted that the UK economy could be boosted by £ 250 billion if women started and built new businesses on a par with men.
In an April update from NatWest, the bank said nearly three-quarters of female business owners found running their businesses stressful during the pandemic, compared with 55 percent of male entrepreneurs.
The Rose review also found that women are significantly less aware of start-up funding options than men, making them more likely to rely on bank loans, credit cards, or family and friends.
Despite the strong numbers, a number of initiatives to support women in business have been launched in the City of London.