The Rise of Women-Powered Businesses: Opportunities and Challenges Ahead

In recent years, the landscape of entrepreneurship in the UK has witnessed a remarkable transformation, particularly with the rise of women-powered businesses. According to J.P. Morgan Private Bank’s fourth annual Top 200 Women-Powered Businesses report, private investment in businesses founded, led, owned, or managed by women has surged dramatically, tripling since 2014 to reach an impressive £4.01 billion in 2023. This trend not only highlights the growing influence of female entrepreneurs but also raises important questions about the sustainability of this momentum in light of emerging challenges.

A Surge in Female Entrepreneurship

The report reveals that since its inaugural edition in 2021, the number of high-growth businesses in the UK has increased by 47.1%, from 33,300 to 49,000. Notably, the proportion of women-powered businesses has also seen a significant rise, climbing from 18.3% in 2021 to 29.7% in 2024. Maya Prabhu, Market Head – UK Domestic at J.P. Morgan Private Bank, emphasizes that this surge in female entrepreneurship is a crucial step towards achieving gender parity in the business world. "By increasing both the number and proportion of women-owned enterprises, we’re transforming the UK’s scale-up scene," she states.

Spotlight on Wales

The report highlights eight notable women-powered businesses based in Wales, including Mandarin Stone, Dulas, and Genpower. While Wales has a smaller population of high-growth businesses compared to other UK regions, with 1,662 companies, it boasts a commendable 31.4% of these being women-powered. Between 2014 and 2023, total equity investment in women-powered businesses in Wales reached £254 million, complemented by £33.7 million in grant funding. However, the report also notes that many of the top companies in Wales operate in traditional sectors, which may limit the growth potential compared to more dynamic industries.

Investment Trends and Challenges

The decade-long increase in private investment in women-powered businesses—from £781 million in 2014 to £4.01 billion in 2023—reflects a broader trend within the high-growth ecosystem. Overall private investment in the UK has risen from £5.2 billion in 2014 to £17.3 billion in 2023. However, the report indicates a significant correction in investment levels, with a 33.9% decline between 2022 and 2023, mirroring a 31.6% reduction in equity investment across the board. This downturn raises concerns about the sustainability of funding for women entrepreneurs, particularly as exit activity among high-growth companies has also declined sharply.

The Exit Market Dilemma

The exit market for high-growth companies in the UK has faced significant challenges, with total exit values plummeting from £7.60 billion in 2022 to £3.32 billion in 2023. Alarmingly, women-powered businesses experienced a staggering 98.3% decline in exit values during this period. Prabhu warns that this downturn poses a particular risk for women founders, many of whom play a vital role as angel investors supporting new female entrepreneurs. The reduction in exit activity could lead to a more challenging funding landscape for women-led businesses in the future.

Sector-Specific Insights

Despite the challenges, certain sectors are showing promise for women-powered businesses. In 2023, the top sectors for equity investment included internet platforms, software-as-a-service, and analytics, insights & tools, which accounted for 28.1%, 24.0%, and 25.9% of equity deals, respectively. Additionally, the artificial intelligence sector is witnessing a notable presence of women-powered businesses, with 519 companies operating within this space. Prabhu notes that while there is investor demand for women-led businesses in digital technologies, the number of deals completed remains a fraction of the overall total. Increasing the number of women starting and leading tech companies is essential for achieving greater gender parity in investment.

Conclusion

The rise of women-powered businesses in the UK is a testament to the growing influence of female entrepreneurs and their potential to drive economic growth. However, as the landscape evolves, it is crucial to address the emerging challenges, particularly in the exit market and funding availability. By fostering an environment that supports women entrepreneurs and encourages investment in their ventures, the UK can continue to make strides toward gender parity in the business world. The journey is far from over, but the progress made thus far offers hope for a more inclusive and equitable future in entrepreneurship.