UK startup investing, female founders and investing in women. Listen to the podcast interview with Julia Elliott Brown
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From The Purse
In this week’s newsletter, we highlight a short extract from the interview with Julia Elliott Brown on The Purse Podcast.
We focus on the UK startup ecosystem since the pandemic, how investing has changed, whether female founders are attracting more capital and investing in women at the seed stage.
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And you can review the news in brief so you stay on top of global financial, economic and investing trends.
I hope you enjoy this week’s newsletter.
Until next week,
Jana
UK startup investing, female founders and investing in women.
We interview Julia Elliott Brown about the UK startup ecosystem, how female founders can raise capital and investing in women.
We interviewed Julia Elliott Brown on The Purse Podcast.
Julia is a highly respected entrepreneurial advisor working exclusively with female founders, with a wealth of experience in inspiring, coaching and supporting high-growth potential businesses.
We talk to Julia about UK startup investing, what’s changed since the pandemic, female founders, investing in women and more.
The following is a short extract from the interview:
Question: Can you summarise what happened in the UK startup investing ecosystem since the pandemic?
Julia’s answer:
Yes. Wow. I mean, it has been turbulent times, hasn't it? Some real highs and some real lows. Obviously when we spoke it was the pandemic.
Investors were really pulling back, focusing on their existing portfolio, putting money into later stage deals where it was a bit less risky.
We had all that stuff going on with the Future Fund, which was where government was stepping in to support and match fund investments. So that did support some of those fundraising rounds during the thick of the pandemic.
But it was tough times, but it was really weird, wasn't it? Because during the pandemic, a lot of these businesses went crazy. I mean, the uplift in revenue for some businesses was through the roof.
We have supported lots of e-commerce clients over the years, and e-commerce is one of those areas where it went nuts, and I think a lot of people were raising investment off the back of those incredible results.
They were getting that massive uplifting traction, which has been quite hard for most people to maintain. So we kind of had this weirdness where it all went very quiet.
The Future Fund came in and deals got done. And then we started to come out of the pandemic in 2021. And investors were really ploughing money into startups.
It was a record year. We had almost £24bn pounds invested in UK startups. Almost, 3000 deals done last year, which is a record.
But I’d say lot of those deals were done off the back of probably unrealistic growth patterns that had happened during the pandemic. So it's quite strange.
We had loads of new investors coming into the UK last year.
I think about a thousand new funds launched in some form or other in the UK last year. And also a record number of exits.
We had about 781 exits, I think in the latest stats I've seen last year. So 2021 was crazy, but this year, and particularly in this last quarter, so Q3 2022, massive drop off across the board.
Part of that obviously is the economic climate and people becoming a bit more risk averse, putting their money into safer vehicles. But I think there is this big market correction that's happened after last year's flurry.
It’s very hard to know whether you're coming or going.
And the thing is, when you're an entrepreneur and you need to raise money, none of this is relevant. If you need to raise investment, you need to raise investment.
Question: What did you see in terms of the capital going into female founders and female founded businesses?
I keep asking this question: why are we still seeing such a small percentage of capital going to female founded startups?
Julia’s answer:
Oh, I know. It's really tiring, isn't it? That we are still asking this question?
Unfortunately, the dial still hasn't moved. We're still seeing less than 1% of all venture funding going to women-led startups in the UK. And I think again, that's a function of when times are tough and investment pulls back.
And investors put money into those later stage deals, into their existing portfolio, into companies where they feel safer, that they recognise, where they have that pattern recognition it and it disadvantages female founders.
So we're just not seeing the dial moving, even though there's lots of noise in the market about female founders.
It's not quite coming through in the stats yet, which is really, really frustrating. So we're still having the same conversation.
Question: What would you say has changed in the UK startup ecosystem since 2020, in your opinion? And are you seeing more female investors in this space now?
Julia’s answer:
There's more money. There's more money coming into the UK and that's clear from all of the statistics that we see. From people like Beauhurst who've got some great stats on this stuff. So there's definitely more capital.
There seems to have been a lot of mega deals, lot of these massive deals going on. So on the surface you're going say, ‘Wow, there's loads of capital’. And you get investors saying, ‘Oh, there's loads of capital for startups’.
But so much of it is going into these big deals and not really coming into that very early stage startup space.
Which is where a lot of female founders are.
If you look at the number of women starting businesses, that has increased significantly over the last couple of years.
The gender balance at the very early stage is getting much, much better. If you talk to people like Virgin Startup Loans they have gender parity in terms of the number of loans they are issuing.
At that early stage you've got as many women as men starting businesses. But there is not enough money at seed funding stage, which is where you've got more angel investors rather than VCs. So all these mega deals are sort of sucking the money out.
In terms of female entrepreneurship, I think there's more and more noise about it.
Lots of people are talking about female founders. The Rose Review, which I'm sure many of your listeners will be familiar with. The Report was commissioned by the government three years ago now has spearheaded by Alison Rose from RBS to look at the state of female entrepreneurship.
You know how that initial report was really informative for the market and they have been updating that yearly continue to press for changes.
Whether the outcomes from the Rose Review have been meaningful or not, I think remains to be seen.
So one of the things we saw come out of it was the Investing in Women Code that investment organisations are encouraged to sign up for, which is good.
It's great that they're signing up for it. But I do question whether it is meaningful: just because you sign up to say that you will appoint someone at a senior level to look at the issue of investing in women, and you say that you are going to look at your processes and address them and you say that you're going to measure stuff, doesn't mean to say that you actually will.
There's no accountability there and there's no measurement really.
I think it's a great start, but there's a lot more to be done to really make this meaningful and for us to see change.
So the noise is great, but it's not enough if we're not really seeing change.
Question: Are you seeing more female investors at the very early stage?
Julia’s answer:
Not really. There are a few more funds coming in that focus specifically on female founders, but they are far and few between, and there's not huge amounts of capital in those funds.
And equally, there are a couple more angel syndicates that are focused on investing in female founders. It's great to see, but the amounts of capital that sit there are a drop in the ocean compared to the capital that exists everywhere.
So I think it's going take too long if we wait to get more female investors in the system to fix it.
We have to get the entire ecosystem, which is mainly male, to look at this in a meaningful way. We have to get the guys on board. We can't expect the women to solve the problem for women because it's just going to take too long.
So I would say not really, although I don't actually have the stats on that to hand.
You've got organisations like the British Angel Association and the British Venture Capital Association, both of those are headed up by women, which is great. And they are also looking at kind of how they get this issue addressed with the angel community, with the VC community…
Listen to the full interview here
News in Brief
Financial news
Nasdaq 100 and S&P 500 trimmed some of last week's gains. Big Tech was down 1.1% for the week, and S&P 500 was down 0.7%.
UK inflation rises more than expected to 41 year high of 11.1%, adding to pressure on Bank of England to raise interest rates again.
Biggest hit to UK living standards on record as Hunt lays out autumn statement. He set out £30bn of delayed spending cuts and £25bn of backdated tax increases.
UK warned tax won’t return to pre-Covid levels for decades after ‘series of economic own goals’.
UK house prices forecast to fall for the next two years. A drop of 9% is expected between now and autumn 2024, the Office for Budget Responsibility (OBR) has said. But a typical two- or five-year fixed-rate deal currently has an interest rate of just over 6%.
Crypto: bitcoin, ethereum, DeFi & NFTs
Bitcoin split from global markets to slide all on its own. Gap in weekly performance of sliding Bitcoin, rallying Nasdaq largest since 2020. Crypto universe shrank to the equivalent of 1% of global equities. (See current BTC price).
Ether drops 4% in a week. It’s current price is circa $1200 (See current ETH price).
Solana plunges 7% as Binance halts Solana-based US Dollar Coin (USDC) and Tether (USDT) deposits, in line w/rivals. Stablecoins and tokens on Solana have come under increased scrutiny following FTX's collapse.
Investors added $43mln to crypto-focused ETPs in the last week amidst FTX collapse & $339.4m in the past year, acc to data compiled by Bloomberg. Crypto ETP assets totalled $5.48bn.
World’s biggest crypto fund hits record 42% discount to value of Bitcoin
it holds in the wake of exchange FTX’s shock bankruptcy filing. GBTC price continues to plunge below the value of underlying coins.
Sam Bank Manager-Fried (SBF) suffered the greatest loss of wealth in economic history? Think again. Elon Musk has lost wealth of $150bn from the top, Mark Zuckerberg of almost $100bn, Jeff Bezos of $90bn. Binance's Changpeng Zhao has lost $80bn and SBF of just $25bn.
The Purse Podcast
We cover the following in our conversation:
The UK startup ecosystem
Startup investing since the pandemic
Julia'a new book, Raise: The Female Founder's Guide to Securing Investment
How to successfully raise as a female founder
How to do due diligence on potential investors
Female angel investors
Why we need more men to invest in women
How to encourage more women to invest in female-led innovation.
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We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and janicka.
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