A recent study by Boston Consultancy Group in the US reveals that businesses found by women ultimately deliver higher revenue—more than twice as much per dollar invested—than those founded by men, making women-owned businesses better investments for financial backers. Yet, women entrepreneurs find it tougher than men to raise funds for their start-ups. While this study focused on start-ups in the US, is it a similar scenario in India?
Meena Ganesh, MD and CEO of healthcare start-up Portea Medical and partner at venture-builder platform, GrowthStory, says she would definitely like to think that women-led businnesses deliver higher revenue. However, Ganesh, who has witnessed India’s start-up story from both sides of the lens, points out that the reason could just be due to the problem. “Because of the disparity that exists and the challenges for women to get funding, those who do are clearly more accomplished, passionate and capable people compared to the general average,” she says. “So, rather than celebrating the fact, we should try and get a lot more women start-ups funded, encourage women in entrepreneurship, get more women to come forward and increase the number of women in the start of the funnel.” According to her, that is where the real problem lies and also the solution to creating long term development, employment creation and wealth creation in the start-up ecosystem.
While women entrepreneurs in India say it is the merit of the business idea, talent, business acumen and the underlying opportunity that determine whether a start-up finally gets the investor’s funds, and thereby generates better revenues, they do believe that some gender bias does exist. While specific cases of discrimination may be difficult to point out, the bar and the number of questions asked is higher for women founders. Women need to address questions about their other responsibilities, their taking a break, their ability to give 100% to professional roles, etc., which a male founder would not be asked. Sometimes, these questions are not asked but there is an underlying bias in minds of the investors. “Women are generally looked upon as building neighbourhood businesses, rather than large scalable ones,” says Sonya Hooja, co-founder and director, Imarticus, a start-up that offers financial services and data analytics training programmes.
The lack of many women in the VC/PE community is a challenge too. Just 8% of partners at the top venture capital firms are women, says Vibha Tripathi, co-founder and CEO of Swajal, an Internet-of-Things based clean drinking water system provider. The venture capital and entrepreneurship world is highly dominated by men, which inherently provides male founders with benefits female founders just don’t have.
“There’s an isolation that women feel in the industry, even I have felt it,” says Tripathi. “If women-led start-ups are women centric and the idea solves problems women face, it’s hard for men to understand it because they have never faced that problem and will never use that product. This is why the ratio of women venture capitalists have to go up.”
For the investor, ignoring half the universe because of a gender bias will be commercially foolish. The fact that women have to work harder to be able to come and pitch, there is already a level of filtering that has happened when they show up. Additionally, it lends balance and diverse skill sets to the core team by having women leaders. As Swajal’s Tripathi says, it is hard to raise money being a women entrepreneur but a radical shift has to happen to completely change the ecosystem of women-led startups. “We need more women led start-ups in India, at least a dozen and more venture capital firms with women as partners. We need diversity and fresh perspective to level the playing field,” she says.
The BCG study concludes that while the current system of funding puts women in a disadvantageous position, in the short term, the reality is that women entrepreneurs must work within the flawed system even as they lobby to improve it. “To prepare their formal pitches, they should seek out coaches—ideally, with VC experience who will assess practice runs and provide feedback. During actual pitches, they should ask for bigger investments, ask more frequently, and avoid underselling their companies,” it says.
Agrees Ganesh: “We owe it to ourselves to raise the bar, show why the idea, sector, team and our passion and capabilities will make it win and make the whole misconception about being a women-founder a non-issue.”
