The UK tech industry has made great strides in improving female representation in the workforce, providing better funding opportunities for women, and reducing the gender pay gap. But for all the progress in recent years, the data doesn’t lie – and it shows there is still a long way to go.
Achieving gender parity in tech isn’t just a ‘nice to have’ for businesses. Studies repeatedly show that companies with a better gender balance are more successful. The broader opportunity cost of excluding half the population is also stark. A recent report by Code First Girls and Natwest highlighted that if the UK were to achieve gender parity in tech, it could add an additional £2.6bn to the country’s economy.
International Women’s Day (IWD) is an annual chance for the industry to take stock and evaluate the progress – or lack of it – in promoting gender equality in the traditionally male-dominated sector.
UKTN has compiled five charts to track progress and highlight the key areas for improvement for female representation and gender equality in the UK tech industry.
Last year was challenging for startup funding across the board. In the UK and globally, the reality of economic headwinds such as soaring inflation and rising interest rates kicked in, leading to a slowdown in tech startup investment in the second half of the year.
Despite this downturn, companies founded by women continued to secure a slightly larger portion of equity investments than the year prior, but the data still makes for grim reading. A report from Beauhurst, published in January, found that just 27% of UK equity deals went to startups where at least one of the founders is a woman.
This marks a small but important increase from the 24% share of female-founded startups in the UK in 2021. The numbers, however, become less impressive when looking at the funding share for startups with only women founders in 2022, which was just 9%. That figure was still, according to the report, a record high in the UK over the last decade and was 3% higher than the year prior.
The funding share for female-founded startups drops even further when looking at the percentage share of the total sum of money invested rather than the number of deals, which in the UK was just 2%.
“Women founders are integral to the UK tech ecosystem, but we need more of them to create and build companies that can challenge the status quo and make the world better,” said Yvonne Bajela, a partner at LocalGlobe.
“Incredible progress has been made so far and it’s important that we continue to champion and support women founders at all stages of their journey.”
The UK is often considered Europe’s leading tech sector, frequently securing the highest levels of venture capital funding. It also ranks top for the worst gender pay gap for tech startups. For tech startups, it is even worse. Data published by compensation benchmarking platform Figures and recruitment platform 50inTech show that women working in the UK tech industry are on average paid 74p for every £1 earned by men, a gender pay gap of 26%.
That figure, which is unadjusted for role and seniority, is worse than the UK’s gender pay gap across all sectors, which in 2022 stood at 14.9%. However, there are signs it is heading in the right direction. The tech gender pay gap in the UK increased by 4p compared to the year prior, a four percentage-point change from 30% to 26%. But it still lags significantly by the European average, which has a gap of 19%.
Women in tech are paid worse than men, but there are also less of them working in the industry. A recent report looking at diversity in UK tech from Tech Talent Charter (TTC) found that 28% of tech workers are gender minorities (99.99% of those surveyed identified as female). This marks a minor increase of 1-2% from the year prior. However, this number drops to 22% when looking at senior roles in UK tech.
The report highlighted that simply increasing the volume of candidates from gender minorities isn’t going to meaningfully address the issue. Instead, it recommends ensuring that the company and industry culture is “one that draws them to stay”.
“The progress made over the last 10 years in making the workplace more inclusive and fairer is very encouraging. These findings however highlight the crucial role that organisations have to play in furthering social justice,” said Dr Anne-Marie Imafidon MBE, co-founder of the women in STEM social initiative Stemettes.
“It’s no longer purely about attracting employees from diverse backgrounds in but about being actively transformational internally to ensure people stay and are promoted fairly.”
Looking at the later-stage tech businesses in the UK there is also a clear discrepancy in the number of tech unicorns – private companies valued at more than $1bn – with founding teams including women versus male-founded firms.
Data published today by the recently founded Department for Science, Innovation and Technology (DSIT), shows that of the 144 tech unicorns in the UK, just 9% (13 companies) had female founders. Among those 13 are Darktrace and Starling Bank.
DSIT, run by former DCMS boss Michelle Donelan, said the gender inequity in UK tech unicorns has caused the department to undertake “extensive work to improve diversity across the sector”.
Yoram Wijngaarde, founder of Dealroom, which compiled the data for DSIT, said: “There is still a huge gap to be made up since the vast majority of startups and funding continues to go to all-male teams. By focusing on this metric and on upskilling talent across the digital tech sector we should be able to make a difference.”
Looking at femtech, the sector that includes startups supporting women’s health and wellbeing, funding has dropped significantly and may be reflective of a wider issue for female-founded companies attracting investment in the UK.
A recent report from industry tracking firm Tracxn revealed that funding for femtech startups in the UK fell by 59% last year, falling from $132m (£111.3m) in 2021 to $54m (£45.5m) in 2022.
The report suggested that this drop-off is down to the unfortunate reality that startups founded by women struggle to secure funding beyond the earlier stages of company growth.
This is backed up by DSIT’s diversity in tech data, which found that nearly 70% of investment deals into women-led startups in 2022 were part of early-stage rounds.
Additional reporting by Robert Scammell.
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