Fund flow picking up for women entrepreneurs

If you thought India is no place for women entrepreneurs, think again.

The representation of women founders in India’s startup ecosystem has been a matter of concern and the money raised by women-led startups accounted for less than 1 per cent of the Rs 10.52 lakh crore pumped into Indian startups over the last 33 months ending December 31, 2021.

But access to funds seems to be improving in recent times for women founders, according to data from Crunchbase.

Women-only led startups got 0.57 per cent of the total funds raised in the nine months which ended on December 31, 2019, and 0.55 per cent of the total corpus in the corresponding period in 2020.

The money raised by women-led startups accounted for 2.06 per cent of the Rs 4.29 lakh crore raised in the April-December period of 2021.

“Although the funding in women-led startups is nowhere up to the mark, there has been a lot of talk around women entrepreneurs in the last few years. We have seen in the past that action is often preceded by a lot of talk,” Vineeta Singh, co-founder & CEO, SUGAR Cosmetics, said in an interview.

Vineeta, who faced huge difficulties while trying to raise capital from male investors in her early days as an entrepreneur, hopes the funding in women-led startups will go up to at least 20-30 per cent in the next 5 to 10 years.

“A decade ago, it was very common for both male and female investors to ask questions around ‘What happens to my money if you choose to have a family?’. But with the shift in terms of financial freedom and growth in female e-commerce shoppers, the investors now at least contemplate on asking such questions,” Vineeta said.

The change in attitude is good news for a country that has consistently scored poorly in the World Economic Forum’s global gender gap rankings and where women account for half of its population of 139 crore.

Need more women investors

For a holistic gender-inclusive startup ecosystem, it is important to have women in key decision-making roles at investment firms.

“We have seen it in the past that to bring gender inclusivity, we need to have women sitting on this side of the table,” said Anisha Singh, founding partner at venture capital firm She Capital.

Only 6 per cent of all Indian startups had women as their sole founders as of December 31, 2019, a Reserve Bank of India survey showed. Even among the startups founded in 2020 and 2021, only 69 out of 2,573 had sole women
founders.

More backing for women could help India realise its true economic potential and create more billionaires such as Falguni Nayar, the force behind Nykaa, which is India’s first startup with a sole woman founder to achieve unicorn status.

While policymakers have launched several schemes to power the startup movement, their accessibility remains a concern.

“The access for women entrepreneurs to these schemes is a big challenge due to very low awareness around the existing incentives,” said Uma Reddy, Managing Committee Member, FICCI and past president of the Association of Women Entrepreneurs of Karnataka.

Another problem is the lack of a collective effort.

“There’s surely a lot of work being done towards women inclusion. Government, too, has come up with some initiatives, but the problem is that everybody is building in silos, which is slowing down the process,” Anisha said.

Also, many Indian women start their business at a small scale in the informal sector whose state does not get captured in the formal data.

“The problem is that the current ecosystem doesn’t allow women to have a vision and run their businesses at a scalable level,” Reddy said.

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