Why the Beauty Industry plays a vital part in closing the Female Funding Gap

Industry Expertise

08/03/2023 by The Red Tree

To coincide with International Women’s Day, beauty consultancy company The Red Tree is launching a new series, ‘Female Founders: The Lip Gloss Gap’ to highlight how the UK beauty industry plays a vital part in closing the female fundraising gap.

The UK hair and beauty industry supports almost 600k jobs – one in every 60 in the UK – and these roles contribute almost £30 billion the British Economy annually (The British Beauty Council).

Last year, less than 1% of European VC funding was awarded to businesses solely founded by females (PitchBook). Despite this disappointing statistic, female founded businesses often generate more gross sales, deliver double the return on investment, and fail less often than male–led businesses (EIB).

The Alison Rose Review of Female Entrepreneurship 2023 has calculated that £250 billion would be added to the UK economy if women started and scaled businesses at the same rate as men, and beauty can play a key role in this.

Given the disproportionally female penetration of employees, founders and fundraisers in the beauty industry, this sector plays a vital part in moving the needle. Furthermore, there are already great strides to combat the issues that are impacting the current statistics.

Global beauty consultancy company, The Red Tree, analysed insight from beauty fundraisers and investors to challenge the situation. Fiona Glen, Director of Projects, explains; “We wanted to shine a light on the great work that is going on in the beauty industry and its contribution to our economy and the future. We have a long way to go, so highlighting the conversation and how the situation can be improved, is vitally important.”

What is contributing to the female fundraising gap overall?

Lack of Female Role Models

Female beauty industry founders and fundraisers are widespread. Businesswomen such as Jo Malone and Charlotte Tilbury play a crucial part in inspiring the entrepreneurs of tomorrow.

Lack of female investors

Claire Cherry, Investment Partner at Joyance Partners which invests in many beauty brands is bucking this trend; “The fact that 49% of our investments in 2022 have an all-female founding team is in part because we have four female investment partners on our team.”

Females are naturally more cautious in their approach.

Simona di Vitera, investor at beauty and wellness fund, Aurea Group, thinks that innate and cultural differences are impacting the gap; “Female founders tend to under-sell themselves and their businesses, resulting in either ‘NO GO’ decisions or much less funding than they could aim for”.

The fundraising process is intimidating, challenging and biased

Jasmine Wicks-Stephens, founder of skincare brand Faace; “Equity crowdfunding gives women without wealthy networks a better chance of achieving success by allowing them to draw from a larger pool of investors and capital. Crowdfunding has been successful for female-led beauty businesses like DAME femcare and Upcircle beauty.”

Highlighting investment and beauty investment as a career

Cherry notes that educational movements are a key requirement in driving change; “This is an educational challenge and has to start in schools by allowing girls to better understand risk and their own tolerance to it. I believe that there is still a gender bias in moving girls towards “safer” jobs, which of course entrepreneurship is not.”

What can we do / is being done to improve this situation?

Market dynamics will move this naturally

Cherry believes that the current investment situation is already driving change; “The growth at all costs mindset has gone and investors have reverted to steady sustainable and ideally profitable growth, which should favour female founders.”

Networking is key

Cherry says “It’s great to see more angel networks emerging globally to support female entrepreneurs and close this funding gap at an early stage in a business’s life as, without this, founders can’t navigate to later stage sources of capital such as VCs”

Research via your community

Farah Kabir co-founder of sexual wellness challenger brand, HANX recommends researching the market closely; “When we had the idea for HANX, we surveyed over 2,000 women about what they really wanted, and used their responses to prove the case for a new female-focused brand in the market”

Maintain resilience

Anna Priadka, founder of refillable toiletries brand Fiils advocates not giving up; “I have spoken to hundreds of investors and out of hundreds, maybe one or two will eventually invest. It’s a numbers game, and a game of resilience.”

The Future Talent Programme

The British Beauty Council has recently launched its, Future Talent Programme. Backed by the Department for Education, The Careers & Enterprise Company and STEM Learning, to communicate the careers within the beauty industry to students aged 11-18.

The beauty industry has such a range of careers from vocational to corporate and academic, yet it is often overlooked as a pathway for successful career.

Shop female Founded

In recent years we’ve seen a movement to support independent and local businesses. Conscious support of female-led businesses can make a further impact. Buy Women Built has a fantastic array of female founded beauty brands to have on your radar.

Female Founders: The Lip Gloss Gap

The Red Tree’s new series ‘Female Founders: The Lip Gloss Gap’ launches today. The series will feature advice from founders and fundraisers from HANX, Fiils and Faace. Beauty investors who have provided commentary and advice include Joyance Partners, Aurea Group and SFC.

This series will be updated monthly and we invite you to share your experiences as we continue the conversation.

The Red Tree is the UK’s leading international beauty brand consultancy and a powerhouse of ideas, insight and inspiration. For an informal discussion on how we might help you, please contact us.