UK Deep Tech Faces Major Diversity Challenge, Royal Academy of Engineering Finds

A report printed by the U.Okay.’s Royal Academy of Engineering has found that fewer than one in 10 of the nation’s deep tech companies is predicated by all-female teams, highlighting a stark gender disparity which may hinder progress inside the sector if not addressed.

The State of U.Okay. Deep Tech report found that 77.1% of founding teams are all male, as compared with 15% which may be blended gender and 7.5% which may be based mostly solely by women. The report attributed the disparity partially to the low proportion of ladies discovering out STEM subjects inside the U.Okay., whereas moreover highlighting broader challenges inside the investor panorama which may be impacting female entrepreneurs and potential founders.

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The U.Okay.’s deep tech selection drawback

In line with the report, the U.Okay. is residence to nearly 3,500 vigorous deep tech companies, 87.2% (3,018) of which can be based in England, and the majority are concentrated in London and the South East of England. These companies attracted an entire of £5.22 billion ($6.6bn) in 2022, with areas along with artificial intelligence, cleantech, quantum computing and VR/AR seeing elevated focus from every founders and merchants.

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Nonetheless, the dearth of selection in deep tech founding teams (Determine A) poses potential challenges for the sector, considerably in phrases of innovation potential and entry to quite a few markets and views.

Determine A

Whereas illustration amongst govt and senior administration teams are additional quite a few – with 39.6% of U.Okay. deep tech companies having mixed-gender teams – 56.7% are all male. This implies merely 3.5% of all deep tech companies are led by all-female teams (Determine B).

Determine B

A well known tech selection draw back

The Royal Academy of Engineering’s report echoes findings printed by the Alan Turing Institute in October 2023, which found that AI startups based mostly by all-female teams accounted for merely 2.1% of funding gives between 2012 and 2022. These all-female teams have secured solely a mere 0.3% of the £69.5 billion ($87.9bn) of VC funding raised by AI startups all through that interval.

Whereas the RAEng report well-known that gender selection was “enhancing amongst deep tech companies as they develop and enhance previous their preliminary founding teams,” it moreover highlighted the historically low participation of ladies and women discovering out STEM subjects inside the U.Okay. as a trigger behind the dearth of female illustration.

This has seen an uptick currently and may improve the number of deep tech founders inside the coming years, the report acknowledged. Nonetheless, it moreover signifies that this gap may partly stem from investor biases, underscoring the need for stronger help strategies for female entrepreneurs.

Ana Avaliani, director of the Royal Academy of Engineering’s Enterprise Hub, acknowledged in a press launch: “Whereas there’s lots to have a superb time, the State of U.Okay. Deep Tech underlines the important work nonetheless to be executed to help deep tech founders to scale and develop their companies inside the U.Okay. It may also be essential for a additional worthwhile, inclusive ecosystem that the gender imbalance in deep tech administration is addressed and that administration selection in deep tech enterprises is championed.”

The benefits of boosting selection

Quite a few evaluations over time have highlighted the benefits of enhancing selection, equity and inclusion inside organizations in phrases of boosting workplace custom and job satisfaction, along with the effectivity of the enterprise itself.

In line with McKinsey’s 2023 report, Variety points way more: The case for holistic have an effect on, companies inside the prime quartile for gender selection on govt teams are 39% additional extra prone to outperform their buddies financially, as compared with 15% in 2015. Likewise, companies inside the prime quartile for board-gender selection are 27% additional extra prone to outperform financially than these inside the bottom quartile.

Easy methods to prolong female participation in deep tech

RAEng’s report underscored the need for centered initiatives and protection modifications to encourage greater female participation and administration in deep tech, which can end in additional quite a few views and innovation inside the sector.

To deal with this, the report steered rising help for girls entrepreneurs, doubtlessly by centered funding, mentorship packages and networking alternate options. Moreover, promoting STEM education amongst ladies and women would possibly assist enhance the pool of potential female founders eventually.

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Commenting on the report, Michelle Donelan, the U.Okay.’s science and experience secretary, acknowledged she was “devoted to boosting STEM uptake amongst of us from all backgrounds, to ensure all people can fulfil their potential as we assemble a extraordinarily professional workforce inside the industries of the long term.”

Donelan added: “We’re a world chief in artificial intelligence, quantum computing and completely different rising varieties of deep tech. To protect this place, we’re working intently with companions identical to the Royal Academy of Engineering to harness experience up and down our nation.”

Avaliani suggested TechRepublic by means of email correspondence {{that a}} lack of financial help and gender biases provided two of crucial challenges confronted by women entrepreneurs, citing a report by Beauhurst that found that decrease than 2p (2.5 cents) in every £1 of U.Okay. equity funding went to all-female founder corporations in 2022.

“Traders and corporations can present important help by backing women-led corporations, giving them a chance to hold additional quite a few companies to market and ship financial and monetary benefits,” Avaliani acknowledged.

Eradicating boundaries, enhancing entry to networks and celebrating perform fashions are moreover key strategies to bolster gender selection inside the deep tech sector, Avaliani acknowledged, pointing to initiatives like Variety VC and Future VC, which focus on rising selection inside the enterprise capital course of.

“Variety inside the funding group stays to be lacking,” she added.

“Important systemic modifications are wished to ship the step change that’s required if we’re to maneuver the needle. This goes from hiring quite a few experience to investing in founders from underrepresented groups to gathering selection info of portfolio companies, number of their very personal teams and committing to measuring progress.”

At a glance: The U.Okay.’s deep tech sector

The report found that cleantech and AI at current dominate the U.Okay.’s deep tech sector, represented by 517 companies and 504 companies, respectively.

AI is being broadly leveraged for capabilities like manufacturing and medicines discovery, the report acknowledged, with the U.Okay. authorities investing carefully in AI initiatives in present months.

The rising urgency to cope with environmental challenges may also be driving demand for the U.Okay.’s superior experience sector, significantly in cleantech, clear vitality know-how and vitality low cost tech, the report acknowledged.

This has been prompted partially by sturdy governmental and regulatory backing, with the U.Okay. Division for Enterprise, Power & Industrial Technique’s Power Innovation Programme having earmarked £505 million ($638m) to finance the commercialisation of clear vitality utilized sciences from 2015-2021.

The report pointed to broader funding challenges inside the U.Okay. deep tech sector. Whereas equity funding in deep tech has grown considerably over the previous decade – from £174 million ($220m) to higher than £5 billion ($6.3bn) – 2022 observed a slight decrease inside the full amount of gives.

RAEng acknowledged this was ensuing from “a elaborate funding environment” and wider monetary challenges that meant merchants had been being additional cautious with their money.

Report methodology

The State of U.Okay. Deep Tech report was based mostly totally on info commissioned from Beauhurst, an info platform that offers data on private companies inside the U.Okay.

Firms inside the U.Okay.’s deep tech sector had been acknowledged using Beauhurst’s high-growth monitoring requirements, which contains options like equity funding, accelerator attendance and tutorial spinouts. The report included companies included on or after January 1, 2013, which had been categorized based mostly totally on explicit Commonplace Industrial Classification codes or sector classifications associated to deep tech. Firms offering consultancy suppliers or pure software program program weren’t included.