Of the eight recommendations we made in the Rose Review in 2019, the one that has aged best is the dullest to describe: it asked financial institutions to publish a number about themselves once a year. Six years on, that reporting requirement has turned up something the review itself under-weighted.
It concerns who decides. Among Code signatories last year, all-female founding teams won 11% of the deals approved by committees where women were in the majority, against 8% of those approved where they were not. I’ve been turning that over for a few weeks.
Widen the lens from the committee to the whole investment team and the same pattern holds, roughly doubled: 13% of committee decisions involved all-female teams where women were in the majority on that team, and 7% where they were not. Broadly the same market. Broadly the same companies asking for capital. Different rooms, different answers.
Reading those eight back now, most were addressed to the founder end of the problem: mentoring, networks, role models, better information about where to go for finance. That’s where the evidence pointed. Nearly half the women we surveyed told us they didn’t know where to access support, and it’s hard to argue with a finding like that.
Those recommendations largely worked. Women in the UK have been starting businesses at rates I wouldn’t have predicted in 2019, more than 150,000 new companies in 2022 alone, twice the number four years earlier. What hasn’t moved is the money.
I’ve come to think we were reasoning from an incomplete map. We looked hard at what founders lacked and less hard at how allocation decisions actually get made. The Investing in Women Code was the exception, because it was aimed at institutions rather than individuals: it asks a firm to put a member of its senior leadership in charge and to account, annually, for what it actually did. Signatories have now outpaced the wider market for six consecutive years.
Asking institutions to describe themselves annually is also what produced the committee numbers. The instrument turned out to be better than the diagnosis behind it.
For years the standard explanation for the funding gap has been pipeline. Not enough women starting the kind of business that attracts venture capital, not enough reaching the stage where institutional money makes sense. It’s an argument I’ve heard put well, and there’s something in it. But pipeline can’t explain why the same pipeline produces different outcomes depending on who’s sitting round the table when the decision gets made. If deal flow were the binding constraint, composition wouldn’t change the result.
It does.
I spent thirty years in banking, most of it on the side of the table that says yes or no. Here’s what I’d take from that. The vote is rarely the interesting part; by the time a proposal reaches one, the questions that will settle it have already been asked, and they were asked by whoever happened to be in the room to ask them. Which risks get named as risks. Which gaps get treated as gaps rather than as things the founders will obviously work out for themselves. Which comparisons come to mind. Which founders a committee has watched succeed before, and can therefore picture succeeding again.
None of it requires anyone in the room to hold a view about women. It requires a room whose collective experience is narrower than the market it’s allocating into. As failures go that one is thoroughly ordinary, and a good deal easier to fix than bias.
Which is why I keep returning to this number rather than the more dramatic ones. The share of venture capital going to teams founded entirely by women has fallen to 1.3%. That figure is worse, it’s quoted far more often, and I’m not sure what a firm is supposed to do with it on a Monday morning. Composition is different. No firm can conjure deal flow this quarter. Any firm can change who sits on its investment committee this quarter. Of the levers in this whole debate, it’s one of very few that doesn’t require waiting for something else to happen first.
I want to be careful about what the data shows. The gap between 11% and 8% is real, it holds across two separate cuts of the same dataset, and it is nowhere close to a solution. A committee with a female majority is still putting the overwhelming majority of its deals into teams that aren’t all-female. These numbers shouldn’t be read as evidence that changing the seating fixes the problem. What they show is that the room is a variable. We’ve spent six years treating it as a constant.
The commercial case doesn’t need restating at length. Institutions that signed the Code and reported honestly against it have consistently directed a greater proportion of their funding to female-founded businesses than the market around them, six years running. The argument for doing that has always been about market efficiency rather than fairness. A market that leaves part of its opportunity set under-examined is a market leaving returns on the table.
Banks and investors are in service of the economy. That’s been my position throughout and I’ve found no reason to revise it. It follows that the job is to find the parts of the economy being underserved and work out why. For six years I’ve described that work as improving access. On the evidence of this report, a fair amount of it is about who’s doing the assessing.