Greater diversity of founders and funders will take start-up scene to next level

Half of Clarendon's 14 new investments since June last year are female led or founded/co-founded, including GenoME Diagnostics. Pictured is the firm's chief operating officer Shannon Beattie
Stuart Gaffikin

PITCHBOOK recently noted that female-founded companies globally are raising venture capital at higher levels than at any point in the last decade, with its research showing US venture-backed companies with a female founder or co-founder raised a record $25 billion in the first half of 2021.

On the surface this sounds like great news, a sign that efforts to boost representation in tech-related entrepreneurship are paying off, helped by maturing networks of female founders.

But Pitchbook said a deeper look at its data showed there is still a big gap in overall funding raised between all-women teams and mixed-gender teams and all female-founded start-ups still get a small share of overall VC dollars. A major reason it cited was that the fact that only a small percentage of venture money is controlled by female investors.

There has been recognition for a number of years that more needs to be done to encourage greater diversity in Northern Ireland's start-up scene.

There is a lot of funding available here for start-ups, early-stage companies and growth companies both from Invest NI's Access to Finance suite of equity funds and private investors such as the members of the Halo Business Angel Network (HBAN).

In addition, from the perspective of Co-Fund NI (part of Invest NI's Access to Finance equity funds that is managed by Clarendon Fund Managers), we are seeing more institutional investors coming from Great Britain, Ireland and beyond as the reputation of local companies grows.

This has helped a new group of innovative female founders and entrepreneurial female-led businesses start to emerge in Northern Ireland and suggests that the barriers that previously stopped some women from starting their own company are gradually being removed or overcome.

We've seen this in our investment activity. Since June 2020, some £59.8m has been invested into our portfolio in 40 investment rounds - 14 new investments and 26 follow-on investments into innovative companies led by fantastic entrepreneurs.

The majority of investments that Co-Fund NI has made into new companies are made at the early stage of the company's growth. We also have the capacity to continue to fund and support these companies right along their growth journeys.

Within our investment activity since June 2020, we've been pleased to see an uplift in new investments into female led or founded/co-founded companies.

Half of our 14 new investments since then are female led or founded/co-founded including Grays Clip, Respiratory Analytics, Sustain IQ, GenoME Diagnostics, Vascversa, Esther, and Blinky Blanket Company.

We're clearly not short of talented women in Northern Ireland. As well as those leading companies that have secured investment, at least half of the entrepreneurs pitching their innovative company to business angels at the most recent events organised by HBAN have been women.

But what we are still low on is female investors within the start-up ecosystem. The emergence of more female angel investors and women in investment roles within seed and venture capital investment funds has already played a role in bringing through some of the companies mentioned above.

However, even at that level of investment we suffer from the same legacy issues affecting the big US venture funds when it comes to representation.

Currently only 14 per cent of business angels in the UK are women and we would certainly encourage more female founders and successful businesswomen to consider getting involved in angel investment.

The greater the diversity we create at all levels of the start-up and early-stage investment ecosystem, the more opportunity there will be for great companies to be created, nurtured and scaled up – innovative businesses that will create jobs, wealth and attract even greater investment, putting Northern Ireland's tech scene very firmly on the global map.

That can only be to the benefit for the economy and all of the citizens of Northern Ireland.

:: Stuart Gaffikin is investment manager at Clarendon Fund Managers

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