Girls are coming into entrepreneurship in report numbers, however new evaluation from Prowess exhibits a pointy decline in women-led employer companies because the pandemic. The issue isn’t ambition — it’s entry to finance, coverage misalignment and a system that also makes progress more durable for girls.
Girls’s entrepreneurship within the UK has reached a turning level, and never the one policymakers anticipated.
Whereas extra girls than ever are beginning companies and coming into self-employment, the variety of women-led companies with workers has fallen sharply because the pandemic. A brand new report from Prowess – the State of Girls’s Enterprise 2025 – exhibits that growth-potential companies led by girls are being squeezed out simply because the UK economic system wants them most.
A robust pipeline in a weak scale-up atmosphere
On the floor, girls’s enterprise seems wholesome. Early-stage entrepreneurial exercise amongst girls has risen steadily over the previous decade, reaching 9.2% of the grownup inhabitants in 2025, the very best fee ever recorded within the UK. Girls now account for 36% of the self-employed workforce, up from 30% in 2015.
However after we take a look at companies with workers, the companies that create jobs and drive progress, the development reverses.
Division for Enterprise and Commerce information present that the share of women-led SME employer companies peaked at 19% in 2021, earlier than falling to 14% by 2025. In sensible phrases, that represents a lack of round 70,000 women-led employer companies in simply 4 years.
This issues as a result of productiveness beneficial properties, exports, and innovation occur in employer companies, not in sole merchants. Girls should not opting out of entrepreneurship; they’re being pushed away from progress.
Why growth-potential companies are falling away
The decline in women-led employer companies just isn’t a couple of lack of ambition. It’s the results of structural obstacles that hit hardest on the scale-up stage.
Many ladies-led companies function in sectors that had been significantly uncovered to post-pandemic pressures together with skilled providers, care, training, hospitality and retail. Rising wage prices, labour shortages and power costs have made using employees considerably riskier.
Entry to finance compounds the issue. In 2024, simply 1.9% of UK enterprise capital funding went to all-women founding groups. Financial institution lending tells an analogous story: women-led companies are much less more likely to apply for exterior finance, extra more likely to anticipate rejection, and extra more likely to be supplied smaller sums, limiting their capability to speculate, rent and develop.
Authorities-backed Begin Up Loans have helped many ladies get off the bottom, with round 40% of loans going to feminine founders, however mortgage sizes are modest, and follow-on capital stays troublesome to safe. Development-stage finance is affected person, versatile, and regionally accessible however continues to be briefly provide.
Coverage misalignment is holding girls again
One of many least mentioned obstacles to progress is welfare coverage. Common Credit score’s Minimal Revenue Flooring assumes self-employed claimants earn the equal of full-time minimal wage — a mannequin that bears little resemblance to how growth-oriented companies truly function of their early years.
For ladies operating companies with variable revenue, significantly these balancing caring tasks, the result’s a robust incentive to remain small, keep away from hiring, or exit altogether. This disproportionately impacts women-led micro-employers and people on the cusp of progress.
The place the expansion potential actually lies
The irony is that ladies are more and more lively in exactly the sectors the UK must scale.
The newest information exhibits robust progress in digital, skilled, and inexperienced economic system companies led by girls, significantly outdoors London. Older girls, specifically, are rising as a strong progress cohort, bringing expertise, networks, and industrial perception after mid-career transitions or redundancy.
Ethnic minority girls additionally present a few of the highest charges of early-stage entrepreneurial exercise, but stay under-represented amongst employer companies as a consequence of persistent finance and procurement obstacles.
From participation to productiveness
For the previous decade, coverage success has been measured by what number of girls begin companies. That focus on has largely been met. The problem now could be totally different.
If the UK needs to unlock the complete financial worth of girls’s enterprise, estimated at as much as £250bn it should shift focus from start-ups to sustainable, growth-potential companies.
Which means entry to significant finance as soon as companies are up and operating, not simply small start-up loans, however affected person capital that allows companies to rent, make investments and scale.
Focused assist on the scale-up stage may make the distinction between a woman-led enterprise remaining a sole dealer or turning into an employer. Girls entrepreneurs should not wanting concepts, ambition or resilience. What’s lacking is a system that persistently backs them to develop.
