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UK VC and Female Founders

For every £1 of venture capital investment in the UK, all-female founder teams receive less than 1p while all-male founder teams receive 89p.

Oxford Capital was one of the first VCs to start to collect and share diversity data as part of our work with Diversity VC. Last year, we backed female founders in three of our seven new investments, but we are aware that there is still a way to go to achieve equality our wider industry.

We are now proud to have contributed to the VC Female Founders report alongside the BVCA and British business Bank. Liz Truss, Chief Secretary to the Treasury will launching the report on 4th February at 11 Downing Street and you can read it here.

Listen to the podcast which takes a closer look at the venture capital sector’s support for female founders in the UK. David Mott, Founder Partner of Oxford Capital and VC Chair at the BVCA, Check Warner of Diversity VC and Alice Hu-Wagner of British Business Bank examine the issues facing female founders seeking funding for their start-ups and the challenges that VCs face in finding them.

David Mott explains “VCs are highly innovative and entrepreneurial organisations and there is an increasing commitment to address the complex issues of diversity and inclusion. We need to work together and learn from each other to make progress.”

Estimated reading time: 2 min

 

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    1. If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
  2. You are unlikely to be protected if something goes wrong
    1. Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
    2. Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
  3. You won’t get your money back quickly
    1. Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    2. The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
    3. If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    1. Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    2. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. https://www.fca.org.uk/investsmart/5-questions-ask-you-invest
  5. The value of your investment can be reduced
    1. The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    2. These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

 

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.