NatWest boss warns city investors “are failing a generation” of women entrepreneurs by failing to shell out money to get their businesses off the ground
The NatWest boss has warned that city investors are “letting down a generation” of female entrepreneurs by failing to raise the cash needed to get their businesses off the ground.
Alison Rose, who became the first female CEO of a major UK bank in 2019, said access to finance was the “number one barrier” holding back women entrepreneurs in Britain.
Research shows that women-founded businesses get just 1p in every Â£ 1 of UK venture capital.
Concern: Alison Rose said access to finance was the ‘number one barrier’ holding back women entrepreneurs in Britain
Rose told the Mail on Sunday: âVenture capital is for investing in the companies of the future and so I know encouraging the investment community to support UK women entrepreneurs and founders will make a real difference. Access to finance is the biggest opportunity and the number one barrier we need to remove. ‘
Rose has already taken steps at NatWest to close the gap. The MoS understands that NatWest’s private banking arm, Coutts, is set to raise Â£ 40million from high net worth clients to support women-led businesses.
Coutts, who counts the Queen among his clients, is planning further fundraising through his UK Enterprise Fund, which he set up in partnership with BGF, an investment firm that manages Â£ 2.5 billion.
A flood of businesses were started during the pandemic by people who lost their jobs or decided to change careers. According to think tank Center for Entrepreneurs, a record 772,002 businesses were created last year.
However, concerns are growing that too many start-ups rely on loans to fuel their growth instead of raising capital from investors.
Companies have taken on cheap debt because of record interest rates. But heavily indebted companies are more likely to collapse if money tightens, and refinancing can be costly once debt expires.
Many small businesses have also turned to emergency government programs during the crisis, including ‘bounce’ loans worth up to Â£ 50,000 each. Around Â£ 46.5 billion in rebound loans have been borrowed, leaving taxpayers in the hot seat if a business fails.
Rose warned that growing companies will need equity financing from investors with deep pockets if they are to survive – and thrive – beyond the pandemic. She said: âMany small and medium-sized businesses are relying on debt to get through the current crisis.
âIt may be necessary in the short term, but in the long term, companies in growing economies need options other than loans – options like equity financing. Successful growth requires a good capital structure. If we fail to put in place a financing structure suitable for the growing economy, we will fail a generation of entrepreneurs.
Rose has been commissioned by the government to examine the state of female entrepreneurship in Britain. In her Rose 2019 review, she found that Â£ 250 billion could be added to the UK economy if women start and grow new businesses at the same pace as 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 to 55% of male entrepreneurs.
The Rose study also found that women are much less aware of start-up financing options than men, and therefore are more likely to depend on bank loans, credit cards, or family and friends. Despite the striking figures, a series of initiatives to support women in business have been launched in the City of London.