Why Credit Scoring and VC Bias Are Holding Back Female-Led Start-ups Women are starting businesses in record numbers, yet access to funding remains out of reach for many female entrepreneurs.

In 2022, just over 20% of all new companies in the UK were all-female led, up from 17% in 2018, according to the 2023 Rose Review Progress Report. Women also established more than 150,000 new companies that year, over twice as many as in 2018.

The Global Entrepreneurship Monitoring survey further found that around 10% of working-age women in the UK were early-stage entrepreneurs in 2023, compared to around 12% of men. In fact, women now account for nearly half of entrepreneurs (46%), a dramatic shift from around one in three in 2019. This progress reflects a strong appetite for female entrepreneurship. Yet when it comes to securing growth funding, the story looks very different, according to the business funding platform, Swoop Funding.

The funding shortfall
Start-ups led by women and ethnic minorities are massively underrepresented in accessing capital. Andrea Reynolds, CEO and founder of Swoop Funding, comments, "Despite the buzz, women-led start-ups secured just 2% of annual venture capital funding in 2024, and there was no improvement on this number in the first half of 2025.

What's often overlooked is that, unlike their male-led counterparts, female-led start-ups frequently carry less debt, highlighting an initial disadvantage in equity access that might push them towards debt, yet they face structural barriers there too."

Funding barriers for women
Reynolds explains that biases in 'pattern-matching' processes, stereotypical expectations, and limited access to investor networks and mentorship for diverse founders affect all funding routes, especially traditional financial institutions. "Too often we see that innovations from women-led firms often don't fit existing funding structures, and the high match-funding requirements for certain debt products can put some founders off," she adds. For many female founders, those barriers are compounded by investor perceptions.

Founder and CEO of wac, George Fairhall, explains, "I didn't know what I didn't know. I assumed it would be hard because I didn't have a network or know anyone who had raised before, but that naivety helped me dive in without overthinking. Once I got into it, I realised it was really hard. As a sole female, non-technical founder of a B2C product, with no revenue, targeting a low-paid market seen as 'high risk,' I basically didn't tick a single investor box. I learned that funding at this stage is less about fitting a template and more about your story, your drive, and your belief in the mission."

Fairhall has also experienced bias more directly, "I've had inappropriate comments made, been told I was 'fit,' and even had remarks about looking tired because I wasn't wearing makeup. I'm often second-guessed, and the bias became even clearer when I'd answer a question well, only for a male colleague to be asked the exact same thing right after."

Samantha-Jane Agbontaen, founder of House Designer, has faced similar challenges."There were moments when my vision was underestimated or seen as a lifestyle business rather than a scalable company. I have been asked more about potential risks than growth opportunities, while male founders I know were encouraged to speak about ambition and expansion. The bias can be subtle, but it does have an impact."

Data supports this stark imbalance in funding, as applications for funding from female founders grew sharply in 2024, rising 90% year-on-year to 1,741, compared with 916 in 2023, according to Swoop Funding's internal data. Male applications grew at the same rate, doubling from 3,727 to 7,078. Yet the gender split in applications remained fixed: women made up one in four, men three in four. Andrea concludes that this data suggests that, while funding is harder to come by for everyone, women are disproportionately losing out.

Funding systems that reinforce inequality
Even when women do seek debt financing, such as start up business loans, the system is stacked against them, according to Reynolds. "Innovations from women-led firms often don't fit existing funding taxonomies, and high match-funding requirements can be prohibitive." She explains that debt products linked to new business grants, accelerators, or public funds frequently require match funding, something female founders are less likely to have access to.

"Current credit scoring models are often inherently biased towards more mature businesses. This creates a 'thin-file' or 'no-file' problem, where innovative but unproven businesses are deemed unscorable or high-risk, regardless of their potential." Early-stage and underrepresented founders, many of them women, are penalised for lacking trading history or assets. Even advances in AI and alternative data carry risks of embedding new forms of bias, Andrea warns, "Without intentional reform of both equity and debt systems, the gender funding gap may not just persist, it could even widen further."

Tackling barriers
Despite these systemic challenges, many women founders are finding ways to navigate the landscape. Agbontaen focused on building credibility and results, sharing, "I focused on building credibility through results. Every milestone we reached, from expanding our client base to winning awards, strengthened our position. I also grew my network to include investors and advisors who understood the design and property industries rather than trying to convince those who could not see the value."

Fairhall explains that she took a different approach, "I became a hustler. When you're early-stage and considered high risk, it's all about the story you tell and finding the people who believe in you. They are out there. I treated every barrier as just another problem to solve." However, both female entrepreneurs say that certain investors have been more receptive, with angle investors being more engaged for both women.

"Angel investors are far more suitable for early-stage businesses. I've also learned that the longer you can keep your cap table clean and bring in people who are invested in more than just money, the better," says Fairhall. Agbontaen agrees, adding, "Angel investors and funds with diversity initiatives were generally more open to my vision. They appreciated the combination of creativity and commercial results, which is at the core of House Designer's growth."

Signs of progress, but room to grow
The UK has no shortage of ambitious women entrepreneurs, but the challenge is ensuring the funding ecosystem evolves quickly enough to support them. Agbontaen does see some movement in the right direction, as she shares, "There is more awareness and visibility around the funding gap for women, and some funds are actively working to close it. While there has been progress, there is still more to be done before the playing field feels level." Awareness alone, however, won't close the gap. Without intentional reform of both equity and debt systems, female founders risk being locked out of the very tools that should fuel their growth.