The influx of cash into AI startups has left women founders behind, according to new research from the Alan Turing Institute.
The institute, a government-backed AI and data science research centre, found that just 0.7% or around £73m of venture capital funding for AI software in the UK since 2010 has been invested into women-led startups.
Furthermore, women-led startups account for just 4% of the total companies in the subsector.
“The lack of diversity in the VC ecosystem sells both women and the economy short,” said Prof Judy Wajcman, lead author of the report.
The report recommended investors specifically ringfence capital for women and other underrepresented founder groups in the AI sector.
“We’re concerned that women-led startups are being left behind, and it’s particularly worrying in large sectors with high investment and little gender diversity like AI software,” said Dr Erin Young, a research fellow at the Alan Turing Institute.
Young added: “This sector is booming, experiencing enormous investment but almost all of the capital invested is being awarded to businesses founded only by men. Policy reform must focus on the inclusion of women and under-represented groups in this space to have tangible impact on equity and innovation.”
The report also recommended a requirement for investors to collect and publish diversity data, particularly when investing in new tech.
This echoes the recommendations made by the women-led high-growth enterprise taskforce, chaired by Starling Bank founder Anne Boden.
The taskforce similarly called for strict requirements from investors on diversity data, with a focus on publishing the number of women in senior investment roles.
Taskforce to drive investment into women-led firms
Prime Minister Rishi Sunak on Monday announced a separate initiative, the Invest in Women Taskforce, that will aim to drive more investment into female-founded businesses.
The Invest in Women Taskforce’s “core aim” will be to create a privately backed funding pot for female-founded businesses.
The new taskforce will be industry-led and co-chaired by entrepreneur Debbie Wosskow and Hannah Bernard, head of business banking at Barclays UK.
“I believe that the key to the UK’s growth will be enabling every single entrepreneur in this country to thrive; female entrepreneurs face significantly higher barriers to get their businesses the support and investment they need, from seed funding for startups, through to the challenges of gaining scale-up investment,” said Bernard.
Responding to the taskforce announcement, Christine Hockley, managing director of funds at British Patient Capital said that “gender disparity at the fund level sets off a chain reaction, with female-led startups less likely to receive funding”.
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