Associate Professor Antoinette Flynn
University of Limerick
Professor Naomi Birdthistle
Griffith University
Jill Pay
Co-founder and former Chairman, The Gender Index
Christiana Stewart-Lockhart
Director General, Enterprise Investment Scheme Association
John Cushing
CEO of mnAI
Wales, located in the southwest of the United Kingdom, had a population of 3.13 million and a GDP of GBP 79.7 billion in 2021 (Welsh Government, 2023[1]; Welsh Government, 2023[2]). Overall, Wales (United Kingdom) fosters a supportive environment for women entrepreneurs, despite representing only 3.3% in 2023 of all UK companies (a decline from 4.1% in 2022) (The Gender Index, 2022[3]; The Gender Index, 2023[4]), particularly through finance, business services, and IT supports. Indeed, over the last two decades, there has been a notable increase in Welsh women’s entrepreneurial activity, with early-stage entrepreneurship rising to 9.8% in 2021 from 5.9% in 2020 (Bonner et al., 2022[5]). Consequently, the participation rate of women-led companies has increased slightly from 19.4% in 2022 to 19.7% in 2023 (The Gender Index, 2022[3]; The Gender Index, 2023[4]).
Welsh women-led companies are attractive investment opportunities, as they grew annual turnover by 16.0% compared to 13.5% for male-led companies for the year 2023 (The Gender Index, 2023[4]). Wales (United Kingdom) stands out as having the highest proportion of women-led high-growth companies1 across the United Kingdom nations2 for 2022 (16.6%) and 2023 (15.9%) (The Gender Index, 2022[3]; The Gender Index, 2023[4]). While the ratio of women-led companies to all companies is lower than the overall UK ratio, Welsh women-led companies outperformed those in English International Territorial Levels (ITLs) 1 regions and other devolved nations by demonstrating greater success in securing external finance, approximately 25%, which is higher than Scotland (United Kingdom) and England (United Kingdom) (Henley, 2024[6]).
The government policies3 of the United Kingdom often offer tax incentives to investors, fostering capital flow to start-ups, in particular the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) which are open to all qualifying start-ups, irrespective of gender of founder. Since 2016, GBP 247 million has been invested in 785 Welsh companies via these schemes (HM Revenue & Customs, n.d.[7]) with 19.1% going to women-led companies in 2022 and 17.9% in 2023 (The Gender Index, 2022[3]; The Gender Index, 2023[4]). However, a 2024 legislative change to the definition of a “High Net Worth” individual had the potential to reduce the pool of qualifying angel investors, prompting concern from stakeholders about its impact especially on women and ethnic minority investors. FinTech Wales4 among others argued that the new legislation was likely to have a disproportionately negative impact on UK ITLs 1 regions outside London (Fintech Wales, 2024[8]), where there are normally fewer eligible angel investors at that new qualifying threshold. Strong lobbying efforts (Startup Coalition, 2024[9]) have led to the Government of the United Kingdom to reverse the legislation to maintain the original qualifying threshold.
There are numerous sources of finance available for Welsh entrepreneurs. The Investment Fund for Wales has a GBP 130 million commitment of funding for start-ups, including start-up loans, debt finance, and equity finance. The Regional Angels Programme (GBP 285 million) invest alongside angel investors in the ITLs 1 regions to reduce regional inequalities in access to finance (British Business Investments, n.d.[10]). Innovate UK is the Government of the United Kingdom’s national innovation agency which invested GBP 40 million in Welsh businesses in 2020-21 (Innovate UK, 2021[11]). Additionally, there are specific campaigns to raise awareness of these policies often centred on ensuring these opportunities reach women founders and investors. These include the Women Backing Women campaign from the UK Business Angels Association and the Invest in Women Hub created by the Council for Investing in Female Entrepreneurs alongside the Department for Business and Trade (Innovate UK, 2021[11]).
Separately, the Welsh Government (the Senedd Cymru) has launched several initiatives to support start-ups through their Business Wales programme and specifically has encouraged “a more gender-focused approach” to support women entrepreneurs to unlock their full economic potential for the greater good of all (Hawlfraint y Goron, 2019[12]). This approach was recommended by a panel of experts commissioned by the Welsh Government in 2017, where the supply of finance was identified as a barrier to growth and success for women–led companies (Innovate UK, 2021[11]). One of their most impactful Welsh policy initiatives is the creation of the Development Bank of Wales (DBW), which provides Welsh growth businesses with debt and equity funding – 82% and 18% of investment volume respectively (Development Bank of Wales, 2024[13]). While the portion of equity funding is smaller than debt funding, in absolute terms, equity funding grew year-on-year by 97% from GBP 11.6 million in 2022 to GBP 22.9 million in 2023, reflecting the growth in total annual funds invested by the DBW (Development Bank of Wales, 2024[13]). The DBW currently manages a range of funds totalling GBP 1.9 billion (Development Bank of Wales, n.d.[14]), including the Wales Angel Co-Investment Fund which is available to syndicates of investors seeking to co-invest in Welsh-based SMEs.
In terms of equity funding investment in women-led companies, research has shown that women are more likely to invest in women-led companies with 25% of investments made by women angels was into women-founded companies, which is significantly higher than the UK industry average of 19% (UK Business Angels Association, 2022[15]), and that there is a shortage of both women angel investors and venture capitalists (Sikakm and Snellman, 2023[16]). Acknowledging this phenomenon, the DBW set up the Women Angels of Wales (WAW), a women-only angel network in 2022 that also educates women investors about the EIS/SEIS and provides on-going investment support. The DBW also generates funding opportunities for spin-outs from the Cardiff University research angel investment (Hall, 2023[17]). WAW is a syndicate of more than 30 women investors and has access to a co-investment fund, where the DBW matches private funding up to a maximum of GBP 250 000 per deal. Since the launch of WAW in 2022, DBW has match-funded three deals and has invested GBP 285 679 (Jones, 2024[18]). The Rose Review progress report 2023 reviewing the state of women’s entrepreneurship in the United Kingdom (Rose and Hollinrake, 2023[19]) highlighted that in addition to providing women entrepreneurs financial support to start, grow and scale their businesses the non-financial initiatives in the form of mentoring, networking and financial and digital technology training are crucial to enabling the entrepreneurial ecosystem for women entrepreneurs. Spotlighting Wales, the 2023 progress report commended the Welsh stakeholder’s collaborative and co-ordinated approach (known as “It’s about time taskforce”) that successfully fostered entrepreneurship pathways for Welsh women founders (Rose and Hollinrake, 2023[19]).
Finally, Welsh universities are a good example of the manifestation of Welsh non-governmental institutional entrepreneurial policies and direct support. While UK universities are independent of government, the majority receive government funding and have a specific policy focus on entrepreneurship and innovation. Welsh universities provide direct support for start-ups, for small business growth and bespoke research and engagement support. An example of where the UK non-governmental institution policy choices have potentially negatively impacted Welsh women entrepreneurs is the 2023 closure of the Welsh gender equality charity Chwarae Teg, which was due to Government of the United Kingdom funding cuts and policy implementation delays. This charity played a strong role in assessing Welsh and UK public policy for its impact on and tracking of gender equality progress, including entrepreneurship, and called attention to policy inequalities and inequity (Lewis, 2023[20]).
The plethora of UK public policies to financially support entrepreneurship are typically gender-insensitive, and continuous additional effort could further promote these policies to women founders and investors across Wales (United Kingdom). However, the devolved Welsh government policy has proactively targeted women by expanding the supply of women-backed angel finance for women-led businesses. The Welsh evidence shows that women-focused policies are effective given the proportion of angel investors who are women (28.7%) being higher than in other ITLs 1 regions of the United Kingdom (Henley, 2024[6]), while the overall number of Welsh business angel investors remains small compared to the rest of the United Kingdom. Further action could accelerate the promotion of existing funds and schemes and promoting non-financial initiatives that support women entrepreneurs.
[5] Bonner, K. et al. (2022), GEM UK: Wales report 2021, Global Entrepreneurship Monitor, https://www.gov.wales/sites/default/files/publications/2022-09/global-entrepreneurship-monitor-gem-uk-wales-report-2021.pdf (accessed on 4 February 2024).
[10] British Business Investments (n.d.), Regional Angels Programme, https://www.bbinv.co.uk/equity-capital/regional-angels-programme (accessed on 2 February 2024).
[13] Development Bank of Wales (2024), Annual report and financial statements 2022/23, https://developmentbank.wales/sites/default/files/2023-10/Annual%20Report%20and%20Financial%20Statement%202022-23.pdf (accessed on 23 February 2024).
[14] Development Bank of Wales (n.d.), Funds we manage, https://developmentbank.wales/about-us/funds-we-manage (accessed on 8 February 2024).
[8] Fintech Wales (2024), Interview with Fintech Wales conducted by A/Prof. Antoinette Flynn on 14 February 2024.
[22] GOV.UK (2019), Devolution of powers to Scotland, Wales and Northern Ireland, https://www.gov.uk/guidance/devolution-of-powers-to-scotland-wales-and-northern-ireland (accessed on 25 February 2024).
[17] Hall, C. (2023), Women Angels of Wales celebrate first anniversary, https://developmentbank.wales/news-and-events/women-angels-wales-celebrate-first-anniversary (accessed on 8 February 2024).
[12] Hawlfraint y Goron (2019), Supporting entrepreneurial women in Wales, Welsh Government, https://www.gov.wales/sites/default/files/publications/2020-01/supporting-entrepreneurial-women-wales-approach.pdf (accessed on 9 February 2024).
[6] Henley, A. (2024), “Wales narrative”, in Driving positive change through data, TheGender Index Report, https://www.thegenderindex.co.uk/uploads/Reports/TGI-2024-Report.pdf (accessed on 8 July 2024).
[7] HM Revenue & Customs (n.d.), National Statistics - Enterprise Investment Scheme, Seed Enterprise Investment Scheme and Social Investment Tax Relief statistics: 2023, https://www.gov.uk/government/statistics/enterprise-investment-scheme-seed-enterprise-investment-scheme-and-social-investment-tax-relief-may-2023/enterprise-investment-scheme-seed-enterprise-investment-scheme-and-social-investment-tax-relief-statistics-2023 (accessed on 5 February 2024).
[11] Innovate UK (2021), Building the future economy: Plan for action for UK business innovation, https://www.ukri.org/wp-content/uploads/2021/11/IUK-18112021-Plan-For-Action-for-UK-Business-Innovation_EXEC-SUMM_WEB-FINAL-26.10.21-1.pdf (accessed on 10 February 2024).
[18] Jones, J. (2024), “Jones, J. interview conducted by Jill Pay on 14 July 2024”.
[20] Lewis, G. (2023), “Gender equality charity Chwarae Teg closure ’terrible news’”, BBC News, https://www.bbc.com/news/uk-wales-66861846 (accessed on 24 February 2024).
[21] Office of National Statistics (n.d.), Data and Analysis from Census 2021: International geographies, https://www.ons.gov.uk/methodology/geography/ukgeographies/eurostat (accessed on 8 July 2024).
[19] Rose, A. and K. Hollinrake (2023), The Alison Rose Review of Female Entrepreneurship – Progress Report 2023, https://www.natwestgroup.com/news-and-insights/latest-stories/enterprise/2023/feb/the-alison-rose-review-of-female-entrepreneurship.html (accessed on 25 September 2024).
[16] Sikakm, I. and K. Snellman (2023), “For female founders, fundraising only from female VCs comes at a cost”, Harvard Business Review, https://hbr.org/2023/02/for-female-founders-only-fundraising-from-female-vcs-comes-at-a-cost (accessed on 25 September 2024).
[9] Startup Coalition (2024), An open letter to the Chancellor, https://www.angels-letter.com/#:~:text=Dear%20Chancellor%2C,startup%20ecosystems%20in%20the%20world (accessed on 25 September 2024).
[4] The Gender Index (2023), “The Gender Index 2023”, https://www.thegenderindex.co.uk/uploads/Reports/TGI-2023-Report.pdf (accessed on 30 January 2024).
[3] The Gender Index (2022), The Gender Index 2022, https://www.thegenderindex.co.uk/uploads/Reports/The-Gender-Index-Report-2022.pdf (accessed on 30 January 2024).
[15] UK Business Angels Association (2022), Women Angel Insights: The impact of female angels on the UK economy, https://ukbaa.org.uk/wp-content/uploads/2022/09/Women-Angel-Insights%E2%80%94The-impact-of-female-angels-on-the-UK-economy%E2%80%942022-report-final.pdf (accessed on 25 September 2024).
[1] Welsh Government (2023), Statistics: Mid year estimates of the population: 2022, https://www.gov.wales/mid-year-estimates-population-2022 (accessed on 30 January 2024).
[2] Welsh Government (2023), Statistics: Regional gross domestic product and gross value added: 1999-2021, https://www.gov.wales/regional-gross-domestic-product-and-gross-value-added-1998-2023-html (accessed on 29 January 2024).
← 1. The definition of “high growth” employed by the Gender Index, is calculated as per the OECD definition of 72.8% growth over a three-year period and excludes any company that has less than 10 employees (The Gender Index, 2022[3]).
← 2. The International Territorial Levels (ITLs) is a hierarchical classification of administrative areas, used by OECD member countries for statistical purposes. In the United Kingdom, there are 12 ITLs 1 regions, including the devolved nations of Scotland, Wales and Northern Ireland (Office of National Statistics, n.d.[21]).
← 3. The government policies of the United Kingdom mentioned here are applicable to the entire United Kingdom. However, there is a devolution of some political and administrative powers to Wales (the National Assembly for Wales, known as the Senedd Cymru), Scotland (the Scottish Parliament) and Northern Ireland (the Northern Ireland Assembly). While Westminster Parliament remains sovereign, it normally does not legislate on devolved matters, without the consent of the devolved legislature. Where Welsh policies are discussed here, they have originated from the devolved political and administrative powers of the Senedd Cymru (GOV.UK, 2019[22]).
← 4. FinTechWales is a sector organisation with an independent membership that champions the FinTech and Financial Services industry in Wales (Fintech Wales, 2024[8]).