Bridging the Finance Gap for Women Entrepreneurs

26. Northern Ireland, United Kingdom: Policy insights on how to target interventions effectively

Professor Joan Ballantine
Ulster University

Dr. Alison Hampton
Ulster University

Background

According to the latest Global Entrepreneurship Monitor (GEM) (Luong et al., 2023[1]), nearly half of the working age population perceive good start-up opportunities in Northern Ireland, United Kingdom. Additionally, some 18.1% of working age adults in Northern Ireland (United Kingdom) indicate that they expect to start a business (from 2022 onwards) within the next three years. Despite these positive aspirations, Northern Ireland (United Kingdom) continues to lag behind the majority of the other regions in the United Kingdom in terms of actual entrepreneurial activity rates. Reflecting this, the Early-Stage Entrepreneurial Activity (TEA) rate1 was 8.7% in 2022, compared to an overall TEA rate for the United Kingdom of 11.0%. These numbers are indicative of an ongoing trend. For example, over the last three years (2020-22), the TEA rate was 7.7% compared to rates elsewhere in the United Kingdom: 10.4% in England, 8.5% in Scotland and 8.1% in Wales (Luong et al., 2023[1]). When the TEA rate for Northern Ireland (United Kingdom) is disaggregated by gender, further disparities are apparent. While the rate rose among women between 2020 and 2022 (from 4.5% in 2020 to 7.3% in 2022), it continues to lag behind that of men in the region (10.2% in 2022 decreasing from 11% in 2021).

Consistent with other regions of the United Kingdom, the most recent GEM Northern Ireland Report highlights that funding remains a key issue for many start-up businesses (Luong et al., 2023[1]), with some 55% of nascent entrepreneurs expected to self-fund their business. Literature tells us that access to finance for entrepreneurs has been demonstrated to be a longstanding issue at a national, European and international level (see for example, (BBB, 2024[2]; Coakley and Huang, 2023[3]; Erogul and Na, 2021[4]; Villaseca, Navío-Marco and Gimeno, 2021[5]; Wu, Li and Zhang, 2019[6]). While there is a lack of literature exploring access to finance for entrepreneurs in Northern Ireland (United Kingdom), experiences from elsewhere indicate that women face particular challenges in terms of financing their businesses: they typically have less capital than men and they launch their business with smaller amounts of capital than their male counterparts (Coleman and Robb, 2016[7]). Women also have difficulties securing capital for growth and are subject to gender bias in bank lending practices. Additionally, women make less use of external financial instruments than men (OECD/European Union, 2019[8]; OECD, 2021[9]). Reflecting ongoing financing issues, the most recent Small Business Finance Markets 2023/24 report (BBB, 2024[2]) confirms that women-led businesses continue to face challenges in raising finance and that this has changed little in over a decade.

Policy issue: Absence of a dedicated women’s entrepreneurship finance policy

Research suggests that public policy has been used to improve women entrepreneurs access to financial capital (OECD, 2021[9]). However, there is no dedicated policy for women’s entrepreneurship in Northern Ireland (United Kingdom) (OECD, 2021[9]). In the absence of dedicated policy, “Economy 2030: a consultation on an industrial strategy for Northern Ireland” (DfE, 2017[10]) sets out the long-term vision of the region to transform into a globally competitive economy. Key to this is developing a “culture which supports, prioritises and celebrates innovation, creativity and entrepreneurship” (p. 9), including increasing the Total Early-Stage Entrepreneurial Activity rate. The vision makes some broad policy statements around the need for funding to support entrepreneurial activity, including highlighting the potential of venture capital and non-traditional funding sources. However, while women are specifically mentioned in the vision as a group for whom tailored actions are required to encourage them into business, the vision does not fully consider how women might overcome the challenges they potentially face in securing appropriate funding.

At a more granular level, the Department for the Economy’s (DfE) “10X Economy – Northern Ireland’s decade of innovation” sets out the vision for the transformation required to support growth in the Northern Ireland economy over a decade (DfE, 2021[11]). Northern Ireland’s economic vision for a “10X Economy” is clear regarding the “need to inspire future generations to work in and create their own businesses … with the ultimate goal of attaining and retaining these entrepreneurs and innovators of tomorrow”. Consistent with the “Economy 2030” vision, the “10X Economy” recognises the need to foster “a culture of entrepreneurship that supports new business development…to drive up the rate of new business starts ups and create an environment that actively fosters and supports entrepreneurs to turn their ideas into reality” (DfE, 2021[11]). Despite this, the “10X Economy” does not directly address access to finance for women entrepreneurs.

Reflecting the sentiments of the “Economy 2030” (DfE, 2017[10]), Northern Ireland’s commitment to fostering and supporting entrepreneurship as well as driving up the number of new business start-ups is at the heart of the most up to date “Entrepreneurship in Northern Ireland Context Paper” (DfE, 2018[12]). The context paper recognises the ongoing challenge of stimulating entrepreneurship and the growing culture of women entrepreneurship in the region. However, the paper does not identify funding as a potential problem for entrepreneurs.

In terms of providing more direct support for entrepreneurs, Invest NI (regional Economic Development Agency) are responsible for the delivery of the DfE’s economic development strategies outlined above. Responsible for stimulating a culture of entrepreneurship and innovation, among other things, Invest NI’s current Business Plan (Invest NI, 2023[13]) recognises that a key priority will be to secure alternative funding sources to drive the economic growth needed to deliver against the “10X Economy”. While Invest NI recognises the need to simplify and assist entrepreneurs in accessing alternative sources of funding, a recent “Independent Review of Invest Northern Ireland” (Lyons, Johnston and O’Reilly, 2023[14]) was carried out to assess Invest NI’s “fit for purpose” to deliver the “10x Economy” vision and recommends that Invest NI rethink the funding supports they make available to clients, to consider the utilisation of alternative sources of funding, and to strengthen their role and expertise in providing funding advice to entrepreneurs. Neither Invest NI’s Business Plan or the Independent Review of Invest NI consider if accessing funding in the region for women.

The above review of Northern Ireland’s entrepreneurship finance policy landscape has identified three key issues which are of relevance to policy makers. First, there is no dedicated women’s entrepreneurship finance policy in Northern Ireland (United Kingdom). Second, consistent with policy making in other areas in Northern Ireland (United Kingdom) (Deiana, Hagen and Roberts, 2021[15]) and elsewhere, including New Zealand, Denmark and Poland (de Bruin and Lewis, 2021[16]; Neergaard, 2021[17]), entrepreneurship finance policy in Northern Ireland adopts a gender-neutral approach. A gender-neutral approach assumes that the financial needs of women and men entrepreneurs do not need to be differentiated. However, given the low TEA rates, and the widening gap between women and men, adopting a gender-neutral or gender-blind approach in the future is unlikely to be effective in reducing the gender gap in entrepreneurship Finally, within the region there is a significant lack of data (both quantitative and qualitative) collected and made available for analysis, documenting women entrepreneurs’ experiences of obtaining finance.

Conclusions

Recent initiatives have attempted to tackle the identified gap in Northern Ireland’s funding landscape. For example, the British Business Bank launched a GBP 70 million investment fund in Northern Ireland (United Kingdom) in November 2023 to support new and scaling business who struggle to secure finance (BBB, 2023[18]). This fund, however, does not specifically address the difficulties women entrepreneurs face in accessing finance. In addition, Invest NI have teamed up with Women in Business to provide opportunities for women entrepreneurs to take part in a competition to receive up to GBP 30 000 in funding (Egerton, 2023[19]), thereby addressing to some extent the financing difficulties women face. While this “Ambition to Grow │Supporting Women” initiative aims to address gaps in funding for women entrepreneurs, the level of funding is relatively small. A more significant opportunity, designed to improve the finance landscape for women entrepreneurs in Northern Ireland (United Kingdom), is the development of a women-led angel investment syndicate AwakenAngels, which operates on an all-Ireland basis. The initiative, supported by the British Business Bank and InterTradeIreland, aims to address deficiencies in the current funding landscape by providing women entrepreneurs with access to early-stage funding (McKay, 2024[20]).

Notwithstanding recent developments in the region, entrepreneurship finance policy in Northern Ireland (United Kingdom) has to date not substantially addressed the challenges faced by women entrepreneurs. Largely reflecting legacy issues, entrepreneurship finance policy remains largely gender neutral. Reflecting this, while the strategic policy landscape (including “Economy 2030”, “10X Economy”, Entrepreneurship in Northern Ireland Context Paper and the Independent Review of Invest Northern Ireland) recognises the critical role of finance in supporting entrepreneurship, it does not explore this landscape with the perspective of supporting women entrepreneurs. Furthermore, ongoing and recent activity in Northern Ireland (United Kingdom) provides evidence that obtaining finance is a particular obstacle for women. To address this ongoing and enduring issue, policymakers could consider developing a dedicated women’s entrepreneurship finance policy, with clear actions and targets, developing an evidence base of the lived experiences of women entrepreneurs in accessing finance together with gender-disaggregated data for those availing of funding resources, and increasing the number of dedicated funding initiatives for women entrepreneurs.

References

[2] BBB (2024), Small Business Finance Markets 2023/24, British Business Bank, https://www.british-business-bank.co.uk/wp-content/uploads/2024/02/small-business-finance-market-report-2024.pdf (accessed on 1 October 2024).

[18] BBB (2023), British Business Bank launches £70 million investment fund for Northern Ireland, Press Release - November 16, 2023 - British Business Bank, http://ww.british-business-bank.co.uk/news-and-events/news/british-business-bank-launches-70million-investment-fund-for-northern-ireland (accessed on 1 October 2024).

[3] Coakley, J. and W. Huang (2023), “P2P lending and outside entrepreneurial finance”, The European Journal of Finance, Vol. 29/13, pp. 1520-1537, https://doi.org/10.1080/1351847X.2020.1842223.

[7] Coleman, S. and A. Robb (2016), “Financing high growth women-owned enterprises: evidence from the United States”, in Women’s Entrepreneurship in Global and Local Contexts, Edward Elgar Publishing, https://doi.org/10.4337/9781784717421.00016.

[16] de Bruin, A. and K. Lewis (2021), “New Zealand”, in Entrepreneurship Policies through a Gender Lens, OECD Publishing, Paris, https://www.oecd.org/en/publications/entrepreneurship-policies-through-the-gender-lens_71c8f9c9-en.html (accessed on 1 October 2024).

[15] Deiana, M., J. Hagen and D. Roberts (2021), Feminist activism and the politics of crisis in Northern Ireland: Why gender sensitive analysis and policymaking must be a priority, https://pureadmin.qub.ac.uk/ws/portalfiles/portal/242794843/CGP_POLICY_BRIEF.pdf (accessed on 1 October 2024).

[11] DfE (2021), 10X Economy – Northern Ireland’s decade of innovation, https://www.economy-ni.gov.uk/sites/default/files/publications/economy/10x-economy-ni-decade-innovation.pdf (accessed on 1 October 2024).

[12] DfE (2018), Entrepreneurship in Northern Ireland Context Paper, https://niopa.qub.ac.uk/bitstream/NIOPA/10571/1/Entrepreneurship-in-Northern-Ireland-context-paper%281%29.pdf (accessed on 1 October 2024).

[10] DfE (2017), Economy 2030: a consultation on an Industrial Strategy for Northern Ireland, https://niopa.qub.ac.uk/bitstream/NIOPA/6145/1/industrial-strategy-ni-consultation-document.pdf (accessed on 1 October 2024).

[19] Egerton, A. (2023), Female-focused programme paves the way for women-led businesses, https://www.belfasttelegraph.co.uk/ad-features/female-focused-programme-paves-the-way-for-women-led-businesses/a450080196.html (accessed on 1 October 2024).

[4] Erogul, M. and H. Na (2021), “A global review of female entrepreneurial finance”, International Journal of Globalisation and Small Business, Vol. 12/1, p. 59, https://doi.org/10.1504/IJGSB.2021.10036479.

[13] Invest NI (2023), Delivering for a 10X Economy, Invest NI Business Plan 2023/24, https://www.investni.com/sites/default/files/2023-10/invest-northern-ireland-business-plan-2023-24-draft.pdf (accessed on 1 October 2024).

[1] Luong, H. et al. (2023), Global Entrepreneurship Monitor Northern Ireland 2022/23, Global Entrepreneurship Monitor, https://www.economy-ni.gov.uk/publications/global-entrepreneurship-monitor-gem-uk-ni-report-202223 (accessed on 1 October 2024).

[14] Lyons, M., R. Johnston and M. O’Reilly (2023), Independent Review of Invest Northern Ireland, https://www.economy-ni.gov.uk/publications/independent-review-invest-northern-ireland-investni (accessed on 1 October 2024).

[20] McKay, C. (2024), Northern Ireland women-led companies access record rates of external capital in 2023 compared to UK, syncni, https://syncni.com/article/11818/northern-ireland-women-led-companies-access-record-rates-of-external-capital-in-2023-compared-to-uk (accessed on 1 October 2024).

[17] Neergaard, H. (2021), “Denmark”, in Entrepreneurship Policies through a Gender Lens, OECD Publishing, Paris, https://www.oecd.org/en/publications/entrepreneurship-policies-through-the-gender-lens_71c8f9c9-en.html (accessed on 1 October 2024).

[9] OECD (2021), Entrepreneurship Policies through a Gender Lens, OECD Studies on SMEs and Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/71c8f9c9-en.

[8] OECD/European Union (2019), The Missing Entrepreneurs 2019: Policies for Inclusive Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/3ed84801-en.

[5] Villaseca, D., J. Navío-Marco and R. Gimeno (2021), “Money for female entrepreneurs does not grow on trees: start-ups’ financing implications in times of COVID-19”, Journal of Entrepreneurship in Emerging Economies, Vol. 13/4, pp. 698-720, https://doi.org/10.1108/JEEE-06-2020-0172.

[6] Wu, J., Y. Li and D. Zhang (2019), “Identifying women’s entrepreneurial barriers and empowering female entrepreneurship worldwide: a fuzzy-set QCA approach”, International Entrepreneurship and Management Journal, Vol. 15/3, pp. 905-928, https://doi.org/10.1007/s11365-019-00570-z.

Note

← 1.  The Total Early-Stage Entrepreneurship rate estimates the proportion of the population that is involved in setting up a new business or managing one that is less than 42 months old.