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Despite progress in recent years, the number of female CEOs in the UK remains much lower than their male counterparts.

Yet, new research reveals that women-run SMEs are significantly less likely to face insolvency than those led by men, suggesting that female founders might be better at keeping their businesses steady.

Insolvency is higher in male-led companies

According to research by Company Rescue, there’s a significant difference in insolvency rates between women-led and male-led businesses. Women-run businesses had an insolvency rate of 0.41%, whereas male-led companies came in at 0.7% – making them 71% more likely to become insolvent.

The study echoes similar results from Company Rescue’s 2018 survey, in which women-led businesses also showed lower insolvency rates. The only notable difference was the type of businesses that became insolvent at the time.

Which industries are the most insolvent?

The study revealed that nine times as many companies are run by men than women. Construction businesses are more likely to be run by men, while education businesses are predominantly female-dominated.

Kevin Steven, Managing Director at Company Rescue, said that the higher insolvency rate in male-led businesses could be due to various factors, rather than just gender alone.

“It may well be that businesses tend to be more likely to become insolvent due to the nature of the industry or recent economic events that are coincidentally run by men,” he commented. 

“In 2018 property businesses made up a higher proportion of women-run businesses that went into insolvency whereas in 2024 it was retail and education. This might suggest that the business sector is not that relevant and so pointing to a higher financial competency, or less risk-taking, by women directors.”

Further research revealed that between July 2023 and 2024, male-led businesses in the construction sector saw the highest rates of insolvency, while wholesale retail companies saw the highest insolvency rates for women-run businesses.

Most insolvent male-led businesses

Most insolvent female-led businesses

Are female business owners more likely to succeed?

The results from Company Rescue’s research strongly suggest that women-led businesses are more resilient to insolvency — so does this mean female founders are more likely to succeed?

Since 2021, the share of women-led businesses in the UK has grown significantly, rising from 18.3% of all high-growth companies in 2021 to 29.7% in 2024. 

Moreover, despite the financial obstacles female founders face when starting a business, many remain optimistic about the growth of their business, as nearly two thirds of women (65%) expect their businesses to grow in the next year, while 40% expect a 20% increase in income.

In March 2024, research revealed that companies with more than 30% female executives were more likely to outperform those with less. Organisations with a good level of gender diversity were also 25% more likely to achieve above-average profitability than companies with less diverse teams.

Statistics for employee engagement and satisfaction have also suggested greater success in female-led businesses. According to data reported by IFA Magazine, employees are 13% happier in companies with female founders, particularly those that build a strong organisational culture, faster career progression, and a better work-life balance. It was also revealed that female-founded businesses offered 14% greater compensation and company benefits, and diversity and inclusion were 15% stronger.

The gender funding gap

While the above figures paint a positive picture for women-led businesses, it’s impossible to ignore the problem of the UK’s current gender pay gap, and the lack of investment funding for female-led businesses compared to their male counterparts.

Women-led businesses in the UK are receiving significantly less funding than male-run companies. In 2023, the average female-founded business received £763,000 in funding compared to £4.7 million for male-led businesses, meaning they received 6.2 times more funding than female organisations.

Closing the gender funding gap isn’t just important for equality —  it can also help to boost the UK’s economy. A report by the Alison Rose Review of Female Entrepreneurship revealed that up to £250 billion of new value could be contributed to the economy if women-led businesses are started and scaled at the same rate as male-run companies.

Entrepreneur Debbie Wosskow and Barclays Bank executive Hannah Bernard also launched the Invest in Women Taskforce initiative in March 2024, aiming to help female founders gain more investment for their businesses.

According to Wosskow, the percentage of equity capital going to women-founded businesses has declined from 2% to 1.8% within the last year. Meanwhile, the percentage of capital going to all-male founding teams increased from 80% in the first half of 2023 to 86%.

“We need to rally the retail banks and the pension funds to commit capital to female entrepreneurs as LPs,” Wosskow said. “If there is a significant pot of money we will get great talent. We can ensure we’ll get the highest quality entrepreneurs and investors coming to the UK.”

Alongside the gender funding gap, there’s also the gender pay gap. According to research by Korn Ferry, women CEOs in the UK’s FTSE 100 index get paid 23.5% less than male business owners. The average pay for male FTSE 100 CEOs was £4.3 million in 2022, while women CEOs were paid £3.4 million.

Should investors back female founders?

According to the data we’ve cited, female-led businesses are not only proving to be more resilient but are also more likely to thrive in the long term.

With lower insolvency rates and a growing share of high-growth companies, women founders are showing they have the skills and vision to run successful businesses. Research also shows that companies with diverse leadership teams tend to perform better, which is beneficial for both the organisation and investors.

That being said, female founders still face significant challenges when it comes to securing funding, as they receive much less investment than businesses run by men — ultimately holding back their growth.

With more investors backing female founders, they’re not just helping to create a more equal playing field — they’re also investing in companies that are proving to be financially sound, resilient and ready for long-term success. Closing the funding gap isn’t just about fairness; it’s also an important move that can help drive the economy forward and unlock a lot of new potential.

The post Female-led companies are less likely to go bust, new research shows appeared first on Startups.co.uk.