Only 1 in 5 UK businesses are female-led as funding gap continues to hold women back

While progress continues for women in business leadership, sector, geography and investment gaps remain.

Women are gradually gaining ground in UK business leadership, but representation remains far from equal. New analysis from Funding Circle, analysing data from the UK Gender Index, shows that just one in five active UK companies are female-led. While female entrepreneurship continues to grow, the data suggests that progress toward gender parity is still slow and uneven, particularly in traditionally male-dominated industries. 

Female leadership is slowly increasing across UK businesses

In 2026, there are over 5.2 million active companies in the UK. Across the UK’s business population, women lead 19% of active companies, amounting to over 1 million companies across the UK. Although this marks continued improvement over time, it still reflects a significant under-representation of women in business ownership and leadership.

Generational trends indicate a slightly higher representation among younger founders, with over 20% of Gen Z and Millennial-led businesses being led by women. Specifically, Gen Z is seeing continued growth year on year from 18.7% in 2024 to 20.28% in 2026. While younger female entrepreneurs are slightly more likely to lead businesses, the differences remain modest, suggesting that barriers continue to influence leadership opportunities across generations.

Health, education and services sectors lead on gender balance

When we look at the sectors in which female founders are highly represented, we find that the representation varies dramatically by industry. Certain sectors are more gender-balanced. Sectors linked to care, education and services show significantly higher levels of female leadership. 

Top sectors for female-led businesses:

By contrast, many technical and infrastructure sectors remain heavily male-dominated. Lowest representation sectors:

These gaps highlight how industry culture, skills pipelines and historical workforce patterns continue to shape business leadership.

Regional differences across the UK

The rates of female-led businesses vary across the UK, although regional differences are relatively narrow overall. Most regions come close to the national average of around one in five companies being female-led, suggesting that the barriers and opportunities affecting women in business are broadly similar across the country.

Regions with the highest representation

The West Midlands comes out as one of the regions with the highest shares of female-led companies, at 19.75% of companies in this region being female-led, showing only a modest lead. While the differences are small, these regions may benefit from more diverse business landscapes and stronger service-sector economies, which tend to have higher rates of female entrepreneurship.

However, when we look at the total number of female-led businesses rather than just the percentage share, a slightly different picture emerges. London, which remains the business capital of the UK, leads by a significant margin, with 292,247 female-led businesses, reflecting both the scale of its economy and the breadth of its entrepreneurial landscape. It is followed by the South East with 136,108 female-led businesses, and the North West with 97,908.

London, a vibrant business hub, has a large concentration of professional services, creative industries, and service-based businesses and sectors; these are the sectors that show comparatively higher female participation in leadership. The capital also benefits from extensive entrepreneurial support networks, accelerators and access to finance, which can help lower barriers to entry for new founders.

The South East and South West also benefit from strong small-business economies and diverse sector mixes, including tourism, professional services and health-related industries, which can create accessible pathways to entrepreneurship.

Meanwhile, the North West combines major urban centres such as Manchester and Liverpool with a strong SME base, supporting a high overall number of female-led businesses despite its female leadership share sitting close to the national average.

Together, these patterns suggest that both economic scale and sector diversity play an important role in shaping the number and proportion of female-led businesses across the UK.

Regions with lower representation

At the other end of the scale, female leadership rates are slightly lower in Scotland (18.01%), the North East (17.65%) and Northern Ireland (17.53%). These regions tend to have higher concentrations of traditionally male-dominated sectors, including heavy industry, construction, engineering and logistics. Where local economies are more reliant on these sectors, female entrepreneurship rates can be lower due to historical workforce patterns and industry cultures.

The investment gap remains a major challenge

Despite growing numbers of female entrepreneurs, access to investment remains uneven. Female-led businesses consistently receive a smaller share of loans, venture capital and equity deals than male-led companies. This funding gap can limit growth potential, particularly for firms in high-growth sectors such as technology and advanced manufacturing. According to the data, out of 53,910 angel investments, only 2,934 of these are for female-led businesses, a tiny 5.44%. 

The disparity highlights ongoing barriers within the start-up and investment ecosystem, where female founders remain under-represented among funded ventures.

Understanding the barriers

Research indicates that several factors may contribute to disparities in why female founders are seeking less funding:

1. Perception of being ‘risk averse’: Many female entrepreneurs have the perception of being ‘risk averse’ and are more cautious about taking on debt, often prioritising low-risk financing or avoiding borrowing altogether. Women’s perceived greater risk aversion can limit access to funding, as investors often favour founders who appear more confident and fast growth-oriented. This can lead to smaller loan applications or avoidance of external finance. It’s important to understand when and what financing is right for your business.
   
   

2. Female founders report greater difficulty accessing funding: A UK report found that 86% of female entrepreneurs said they had trouble accessing finance to grow their business, compared with 76% of men, and 17% said access to funding was one of their top concerns for future growth. Barriers included finding suitable investors (36%), lack of networks (31%), and uncertainty about the right funding options (31%).
   
   

3. Lack of confidence or financial literacy can deter applications: A UK survey by Small Business Britain showed 58% of women business owners take out no external finance, with nearly four‑in‑five (79%) self‑funding their businesses, and 57% saying lack of business knowledge or confidence is a barrier to growth. These patterns support research suggesting women are more cautious about debt and may feel less prepared to engage with lenders.
   
   
4. Perceptions of bias deter female founders: Female investors are twice as likely to back women, but women hold just 15% of positions on investment committees. This under-representation contributes to unconscious bias, with decision-makers tending to favour entrepreneurs who reflect their own backgrounds and experiences. A survey conducted by Pink Salt Ventures, an early-stage investment firm, found that 83% of surveyed female entrepreneurs cited a lack of female decision-makers as the most significant barrier to securing funding.
   
   

Applications from female-led businesses rise 60% as more women seek growth funding

Despite barriers, new lending data from Funding Circle suggests encouraging momentum in how female-led businesses are engaging with external finance. While women currently account for a smaller share of total applications, the latest figures show that female entrepreneurs are increasingly turning to funding to support business growth.

From Q2 2023 to Q2 2025, applications from female-led businesses increased by 60% year-on-year, almost double the 33% growth seen among male-led businesses.

This trend continued through the approval stage, with approved applications for female-led businesses rising by 81%, significantly outpacing the 56% increase recorded among male-led firms. The total value of approved funding also grew strongly, increasing by 112% for female-led businesses compared with 78% growth for male-led businesses.

Together, these trends indicate growing confidence among female founders in seeking external finance to support expansion, investment, and operational stability.

While average loan values for female-led businesses remain around 25% lower than those secured by male-led companies, this difference can often reflect factors such as company size, sector concentration and borrowing needs. The rapid growth in both applications and approvals suggests that female entrepreneurs are increasingly engaging with funding options and playing a larger role within the UK’s small business finance landscape.

Tiana Portugal, VP, Sales and Marketing at Funding Circle said: 

"Improving access to credit is core to Funding Circle's proposition. Our technology allows us to make fair lending decisions based on data rather than personal opinion. Our biggest challenge is encouraging more women to apply for funding and this has been our focus over the past few years. By refreshing our brand positioning and increasing female representation in both our marketing and leadership positions we have been able to accelerate growth in applications for women-led businesses."

Access to finance remains a key barrier to closing the leadership gap. Lending data reflects a wider trend across the UK startup and investment landscape: women are still less likely to apply for finance and tend to receive smaller amounts when they do. This funding disparity can have long-term consequences for business growth. Access to capital, whether through options such as small business loans or working capital finance, is often a critical factor in enabling companies to scale, enter new markets and invest in innovation.

Access to flexible funding options, such as a business loan, can help SMEs invest in equipment, hire staff, or manage cash flow during key growth periods. However, research consistently shows that women entrepreneurs often report lower levels of confidence when applying for finance, as well as fewer established lending relationships compared with their male counterparts.

Addressing these challenges may require targeted financial education, mentorship programmes and lender initiatives designed to build confidence and familiarity with business finance among women, alongside continued attention to systemic disparities in access to capital.

Methodology: The analysis draws on multiple datasets to capture the state of female entrepreneurship in the UK, including the UK Gender Index, Funding Circle lending data, Companies House records, investment databases covering angel, venture capital, and private equity funding, as well as surveys and reports from organisations like Small Business Britain and Pink Salt Ventures.