Women Entrepreneurship in India: How women-led startups bridge the gender funding gap?
4 min read 06 Jul 2023, 02:53 PM ISTIndian businesswoman Tanul Mishra faced biased questioning about her ability to balance work and motherhood during her entrepreneurial journey. Despite government support schemes, only 0.3% of venture capital funding in India went to women-led startups in 2021.
PremiumWhen Indian businesswoman Tanul Mishra recalls the initial stage of her entrepreneurial journey, she remembers when the investors reminded the now Afthonia Labs co-founders about their kids' upbringing. “What about the kids?" the investor asked the womenpreneurs when they pitched him for funding for their previous organization ‘Eatelish'.
However, the strong-headed womenpreneurs gave a sarcastic reply to the investor and said they don't believe in child labor, indicating the absence of close contact with kids in the workplace to maintain the balance between their professional and personal life.
“As we were two women entrepreneurs and in one such pitching, the investor asked us what about the kids? In a humorous way, we answered that we do not believe in child labor."
The women-at-work sighed with the rigid thoughts of a male-dominating society after confronting the patriarchal mindset of investors. She said, ‘such a question may never be posed to male entrepreneurs’.
“These are some of the instances of the biasedness that we see in the ecosystem. As mentioned, I have already worked in the executive business, so the investment cycle was much easier for Afthonia," Tanul Mishra told Livemint.
While the scenario was completely different in other countries. Tanul compared India's fundraising situation with the United Kingdom, China, and the United States where women do not experience a gender funding gap.
She told us, “When I looked at other ecosystems like US, UK, and China, they had a very structured support system to help startups in the form of incubators and accelerators. This motivated me to set up Afthonia, a structured ecosystem for startups to grow."
The idea of Afthonia is to focus on fintech (a combination of money and technology), influenced by the fact that this is a complex sector with far-reaching repercussions, she added.
According to government data, India ranks 57 out of 65 on the MasterCard Index of Women Entrepreneurs, which gauges how women in business are progressing globally, and only one in five of the country's businesses are led by women.
However, unequal success to capital is a key barrier for women entrepreneurs. When women entrepreneurs do approach potential investors for financing, they are more likely to be rejected.
Many small Indian enterprises are either self-financed or financed with family support - both of which are more difficult for women entrepreneurs. In a Bain & Company and Google survey, 43% of women said their families and spouses did not support their businesses due to which they need funding from others.
In 2021, only 0.3% of India's venture capital funding went to women-led startups. A 2022 survey by the non-profit Bharatiya Yuva Shakti Trust (BYST) stated that more than 85% of women entrepreneurs faced challenges in availing loan services from public sector banks.
It is pertinent to note that the Indian government has financial support schemes for female-led enterprises, but only 3.4% of all women entrepreneurs have benefited from them, according to a study by the Initiative for What Works to Advance Women and Girls in the Economy (IWAAGE).
However, exceptions are always there. Some businesswomen have a smooth entrepreneurial journey while looking for funding.
Ritambara Das, co-founder of Better Beauty has grown up in an entrepreneurial family, hence, she was fortunate enough to encounter relatively fewer funding challenges than others.
“I was fortunate to have established connections and support from investors right from the start. Indian woman entrepreneurs presented their own set of obstacles. One such challenge was navigating a male-dominated society. Despite significant advancements in gender equality, gender biases, and stereotypes continue to influence various aspects of business and entrepreneurship, leading to the undervaluation of women's leadership abilities," Das said.
She recommended that women should primarily focus on building a strong network which involves seeking out mentors, joining entrepreneurial communities, and participating in networking events to overcome gender funding gaps in the Indian startup ecosystem.
Apart from this, women entrepreneurs should actively seek out funding sources that specifically target women-owned businesses because many venture capitalists are inclined towards promoting women entrepreneurs in today's world, Das told Livemint.
Harsirjan Kour, PedalStart founding team also recollected one such incident in which the investor also discussed her personal life choices or being subject to more risk-averse evaluations compared to their male counterparts.
“A lot of potential investors express a lack of confidence or interest based on assumptions or stereotypes about women's abilities in certain industries or business domains," Kaur said.
When it comes to funding, women entrepreneurs often find themselves striving to convince investors of their seriousness, dedication, and capabilities—an uphill battle that requires presenting themselves with strength magnified tenfold, she added.
Hence, she recommended that believing unwaveringly in your vision and persistently working towards its realization are crucial factors in overcoming the gender funding gaps that women entrepreneurs encounter.
Meghna Mittal, Co-founder Hoopr said that she remained focused on the customer-centricity of her business idea as it helped her a lot in convincing the financers to put in their money.
“By stressing the compelling need of the market, I presented a clear picture of why our product/service will find favor with the target audiences. Such a fact-based and need-oriented approach clicked with lenders and kept them focused on real issues rather than taking decisions keeping in mind subjective issues such as the gender of the pitching entrepreneur among others," Mittal said.
