Women face a significant gender imbalance when it comes to securing funding for their AI startups in the UK, according to a report from The Alan Turing Institute. The research reveals that over the past decade, companies founded by women have only managed to secure 0.3% of the £69.5 billion ($85.1 billion) of venture capital raised by UK AI startups. This stark difference in funding is a reflection of the wider underrepresentation of women in the AI industry.
The report, titled Rebalancing Innovation: Women, AI, and Venture Capital in the UK, highlights that the average capital raised by a female-founded AI company in the UK between 2012 and 2022 was £1.3 million ($1.6 million), which is six times lower than the £8.6 million ($10.5 million) raised by all-male founder teams during the same period.
Furthermore, the report reveals that startups with all-female founder teams accounted for just 2.1% of all funding deals, while a staggering 79.6% of deals were with AI companies founded by men, who secured 79.3% (£55.1 billion/$67.3 billion) of the total capital invested in the sector.
These statistics highlight the urgent need to address gender imbalances in AI funding, not only to promote equality but also to ensure responsible AI design in light of the industry’s rapid growth. The impact of venture capital investors is immense, as they shape the culture, products, and services of the companies they invest in. With AI development on an exponential trajectory, diversity within the industry is crucial.
Despite the global boom in AI software, the report found that all-female teams in the UK raised less than half a percent of the £35 billion ($42.8 billion) invested in AI software over the past decade.
This issue extends beyond funding alone. The report exposes the significant underrepresentation of women in the venture capital industry itself. In the UK, women make up just 20% of investment roles and a mere 12% of senior investor roles. Firms with equal or majority representation of women at the decision-making level constitute a mere 4.5% of all venture capital firms.
Addressing these disparities is crucial for preventing biases in AI systems and ensuring safe, responsible, and equitable designs. The lack of diversity in the AI and venture capital industries can result in harmful feedback loops of biases being built into machine learning systems. It is essential to have diverse perspectives and priorities in the companies shaping AI technologies.
While the UK government has made significant investments in AI and data science technologies in recent years, more needs to be done to address the gender imbalance in investment practices. In comparison to the US, where there is a growing focus on diversity in innovation, the UK lacks initiatives specifically targeting AI investment. Dr. Erin Young, a research fellow at The Alan Turing Institute, suggests that measures such as legislation requiring VC firms to disclose the gender and race of the founders they invest in could be beneficial.
To reduce gender disparities in VC funding, the report proposes several recommendations. These include improving recruitment and promotion processes, monitoring investment practices to ensure equal opportunities for women in leadership roles, and using gender lens investing strategies to minimize biases in investment decisions. Building stronger relationships with tech and entrepreneurial communities could also help widen access to investor and founder talent.
The gender imbalance in AI funding not only hampers the growth of female-founded startups but also perpetuates biases in AI technologies. Addressing these inequities is crucial for creating a more inclusive and responsible AI ecosystem. It is high time to bridge the gender gap in AI funding and ensure equal opportunities for women in this rapidly advancing field.
