The Contemporaneity: 'Whys' Of Poor Investment In Women-Led Startups

The outdated habits and unconscious bias that affect the proportion of investments by institutional investors/PEs/VCs should be collectively decreased. It is long past due for the funder-founder ecosystem to represent positive diversity. While all the pep talks are being celebrated, the ratio of investment in only women-led enterprises stands close to 1.5 per cent out of all funding that happens in India.

Decoding The 'Whys'

The problems are rooted in society's mentality, which will be hard to change. As per the report, women got only 1.5 per cent of total funding. What would be the reasons for this? The reason behind this can be twofold. First, there might be fewer applicants who can affect the percentage to be so low, second could be biased against women founders during the funding rounds. Women face multiple hurdles which are why many women-owned startups don't come out as funded ones.

“Changes can be done on the upper levels; the industry needs to be sensitized and informed of biases at play, and objective screening processes should be adopted. Even the families of women entrepreneurs should understand and support her,” states Ritika Jayswal, Founder Nourish Mantra. 

One of the major reasons could be investors’ landscape and VCs/Pes being led by men and not many women. However, investments are available for brands that are ready to break the stereotype and disrupt the industry.

Bringing in the cultural shift demands innovative breakthroughs. “The first action point is for women entrepreneurs to support other women entrepreneurs and believe in each other's leadership and capabilities. Create cohorts, find mentors, and take guidance from peers,” Devidutta Dash, Founder and CEO, Lemme Be suggests.

The Growing Graph: 360 Degree Support

Multiple studies have pointed out that having more women founders can not only lead to higher participation of women in the workforce but also would drive economic growth significantly. “Deep-rooted beliefs take time to change. The success of women-backed start-ups like Nykaa, Ampere Electric would make the investors stand up and notice. As an ecosystem, we need to gear towards celebrating the success of such entrepreneurs,” opines Kanika Suri, Director, Tossido.

Another hard-hitting reality of today’s progressive times is that our previous generations are raising independent thinkers and aspirers of today in a gender-neutral environment with the girls moving up the career ladder alongside men. The scenario is surely changing albeit at a slow pace. Other factors that add on are given below-

- Population of women entrepreneurs going out there to get the funding is very small. Right now it is a challenge of a low base.

- Socio-cultural issues that draw barriers when it comes to networking or the unconscious biases that are set in the minds of people.

- Less females on the other side of the table in VCs.

A lot of women entrepreneurs are still struggling to find the right framework and support system to grow and sustain their businesses. “VC/PE investors need to look at women entrepreneurs beyond their gender. To not just support women entrepreneurs but actively seek them out and work with them on an equal platform,” mentions Anika Parashar, Founder and CEO, The Woman’s Company.

Painted with the traditional gender roles, women are expected to put their families first and this is reflected not just in the start-up economy but also in all sectors of commerce. While women are definitely being recognized for their achievements in the business world, there is still an unfavourable skew towards their male counterparts.