Dear India Inc., Why Are We Not Doing Enough To Support Women Startups

India ranks 135 out of 146 in the global rankings when it comes to the gender pay gap, according to the World Economic Forum's 2022 report. An International Labour Organization report says, on average, women in India earn 73% of what men earn for doing the same job.

Given the state of affairs, the general comment one hears is that women should start working for themselves. They have the capability, courage, and passion to make any business work. So what really is holding them back?

Dear India Inc., let's find out how easy or difficult it is for women in India to start their own companies or businesses.

A Google and Bain and Company 2020 report found that India has nearly 1.5 crore women entrepreneurs, that's 20% of all the entrepreneurs.

And while that sounds like a solid number, digging deeper reveals the real picture. The majority of these entrepreneurs run single-person enterprises. This means that these are self-employed women and a one-person company. A number of enterprises reported as women-owned are not in fact controlled or run by women. A combination of financial and administrative reasons leads to women being "on paper" owners with little role to play in any kind of administration.

According to the sixth economic survey, nearly 80% of these businesses are self-funded.

In 2022, only 8% of Indian tech start-ups will be led by women, according to Traxcn, a leading market intelligence platform for tracking start-ups and private companies.

If we look at industry-specific data, the top three industries for women-led startups were fashion technology with 1,073 companies, followed by K12 edu tech with 453 companies, and online grocery selling with 398 companies.

India is home to over 108 unicorns, but less than 1% are led by female chief executive officers, and only 15% of unicorns have female co-founders.

And according to a data survey by Nasscom and Zinnov, between 2019 and 2022, only 17% of investment deals in India were by startups with women leaders.

While these numbers are depressing, let's look at other factors that lead to women being left behind.

Simply put, it is lack of funding, lack of awareness, lack of training, lack of confidence, lack of network, lack of mentors and role models, and finally lack of gender equity that is really holding women back.

In the MSME sector, a huge credit gap is visible where women are either funding their own businesses or taking support of informal credit options.

The reasons take us back to the unconscious bias with which banks operate even in 2023.

There was a time when banks asked for an NOC from husbands before sanctioning business loans to women. That is no longer needed, but questions on how many ‘men' are part of the business are slipped in.

Women-led start-ups raised $9.4 billion in funding, according to an Inc42 survey conducted between 2014 and 2021. That is merely 8.4% of the $112 billion raised by Indian startups.

For every Rs 100 of venture capital investment in India, all female founder teams get less than Rs 1, mixed-gender founder teams get Rs 9, and Rs 90 go to all male founder teams, according to a report by Kalari Capital.

So how does one fix this? It all boils down to the same issue. We need more women in investment roles. Of the partners at the top 100 VC firms across the globe, only 7% are women, which is bound to impact the decisions that these investors make.

IIM Bangalore's flagship business incubator for start-ups, emerging businesses and women entrepreneurs in India, there is lack of awareness and information available for women, according to NSRCEL. We need to bring in women-focussed funding initiatives.

Women need skill development, deep learning, and training to be able to pivot themselves to create enterprises that offer scale and employability to others too.

Women face challenges in mobility when reaching customers, collaborators, or vendors.

They face challenges in building a strong network of contacts in the business world, which can limit their ability to find partners, advisors, and mentors who can help their ventures grow.

At a personal level, women feel underconfident and undersell themselves. Mentoring, upskilling, and training can make a huge difference here.

We need more female entrepreneurs to innovate and make more diversified products. We need more women entrepreneurs to promote gender equality and reduce the gender gap in society. And if you still need further evidence of why we need more women entrepreneurs, here's a simple fact: Countries with higher levels of female entrepreneurship have better economic outcomes.

Mugdha Kalra is a journalist with over 20 years of experience. She is a renowned inclusivity expert and was chosen as one of BBC100Women, 2021.

The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team