More than a third of female entrepreneurs experience gender bias when trying to raise capital for their business, according to research by HSBC.
In a report published Tuesday, the bank said British and American women experienced the most bias while seeking investment when compared to their international counterparts.
HSBC surveyed more than 1,200 entrepreneurs — just over half of whom were female — across eight countries in North America, the Middle East, Europe and Asia between June and July. The wider survey was carried out online, with the bank also conducting in-depth interviews with female business leaders in Europe and Asia.
In the U.K., 54% of women reported being subjected to bias from investors during funding rounds, with 46% of female entrepreneurs experiencing gender bias in the United States.
Women seeking business investment in China experienced the lowest levels of bias, according to the report, with just 17% saying they felt investors were prejudiced against them because of their gender.
Where are female entrepreneurs facing the most gender bias?
- United Kingdom (54%)
- United States (46%)
- Singapore (41%)
- Hong Kong (31%)
- United Arab Emirates (31%)
- Saudi Arabia (31%)
- France (22%)
- China (17%)
To qualify for inclusion in the survey, participants must have secured or been in the process of securing at least £100,000 ($122,600) of capital from investors.
Gender bias from investors commonly came in the form of questions about entrepreneurs’ family circumstances and their credibility as business leaders. Female participants in the study said they were asked more questions about their personal life than their business idea, whereas men were mostly asked about their business idea.
“Whilst entrepreneurship as a whole has been flourishing, we were disconcerted by the fact that still today, female entrepreneurs represent just 3% of deal flow,” HSBC said in the report. “While the proportion of women-led start-ups continues to grow, female entrepreneurs are statistically still playing catch-up.”
Bias from investors also translated into women securing an average of 5% less capital than their male counterparts, HSBC claimed. In the U.S. that discrepancy widened to 8%, while female entrepreneurs in France and the U.K. reported the next largest investment gaps at 7% and 6% respectively.
According to HSBC, women in Saudi Arabia and the United Arab Emirates were achieving the highest proportion of their funding targets, with female entrepreneurs in both nations reporting that they achieved an average 45% of their capital targets from investors. Women running businesses in China were the next most successful at securing capital, reaching an average 40% of their targets.
At the other end of the scale, women in the U.K. and France received the smallest proportion of their capital targets when seeking investment, with female entrepreneurs in the two countries securing less than 25% of their targeted amounts.
Globally, women secured an average 57% of the capital they sought from investors, while men secured 61%, according to the report.
Previous research has highlighted the funding gap between male and female-led companies. In February, a study from the government-owned British Business Bank found that for every £1 ($1.23) of venture capital (VC) investment in the U.K., all-female founder teams receive less than one pence, while mixed-gender teams get around 10 pence.
Meanwhile, a 2018 report by venture capital (VC) firm Atomico said that just 6% of venture-backed start-ups in Europe were led by a female CEO last year. Researchers also found that 93% of venture capital funding in the region went to all-male founding teams.
And according to a study published in March by Biz2Credit, the average business loan for female-owned U.S. firms was a third less than the average loan given to male-owned enterprises last year.
Commenting on HSBC’s findings, Jackie Waring, CEO of Investing Women, said the VC firm had seen first hand that women seeking investment for their businesses face multiple challenges.
“One of the problems is that the investment and business angel market continues to be male dominated and, while the situation is improving, this can present a significant barrier for some women seeking capital for their companies,” she said.
Meanwhile, Elizabeth Galbut, managing partner of SoGal Ventures, told CNBC via email that there was “deeply rooted bias from venture investors towards women-led businesses.” “Despite extensive research data, most venture capitalists have ignored the multi-trillion dollar opportunity of investing in women,” she said.
“As a female founder myself, I completely relate to the negative experiences shared around fundraising,” added Anu Duggal, founding partner of Female Founders Fund. However, she told CNBC in an email that there was increasingly a “very strong momentum for female founders.”