Women’s Entrepreneurship Day: Only 20% of MSMEs are owned by women. Will the success of Falguni Nayar’s startup Nykaa change the landscape of women and business? Well, time will tell. During this time, we spoke to experts and tried to understand how the knot – of gender gaps, guilt, financial barriers, lack of awareness of schemes and multiple biases, including those that the one imposes oneself, – can be disentangled to facilitate the access of more women to the hot seats of the company. .
In 2012, investment banker turned entrepreneur Falguni Nayar launched Nykaa with the tweet “Beauty has a new name”. Eight years later, Nayar made history when Nykaa became the first startup founded by a solo woman in India to become a unicorn. Last year, FSN E-Commerce Ventures (parent company of Nykaa) also became the first profitable unicorn to go public.
Nayar’s story is an inspiration to many young female entrepreneurs trying to build their presence in the business world, which is largely dominated by men.
In fact, according to data from media organization Inc42 in May 2022, only 15% of Indian unicorns have at least one founder. According to the 2020-2021 report of the Ministry of Small, Micro and Medium Enterprises, only 20% of MSMEs are owned by women.
The data also revealed that 79% of these unicorns, which have at least one female founder, were incorporated after 2011, showing that the past decade has seen more women getting into entrepreneurship. This indicates some progress, but also highlights the gender divide.
Female entrepreneurship plays a crucial role in the Indian labor market as it catalyzes their participation in the labor force which in 2020-21 according to the periodic Labor Force Survey stood at 25.1%.
“In our country, women are the main caregivers of the family. Due to this responsibility, a large part of the female workforce decides to quit their job after maternity. Many, in fact, do not return due to societal norms and lack of employer support,” said Smitha Rao, co-founder of Utthunga, an industrial computing company.
According to data released in 2020 by the gender research and advocacy organization, Initiative for What Works to Advance Women and Girls in the Economy, only seven out of every 100 entrepreneurs in India are women. In fact, India ranked 57th out of 65 in the Mastercard Index of Women Entrepreneurs 2021 global ranking.
Recently, Finance Minister Nirmala Sitharaman, addressing a conclave of women directors at the ESB headquarters in Mumbai, urged women entrepreneurs and business leaders to take on leadership roles and said councils of directors could not continue to remain a “men’s club”. The question though here is what stops women?
What stops women?
“Among the most obvious or common ones such as the responsibility of running a household and lack of family/spousal support, there are many other barriers that women face as they pursue their entrepreneurial journey such as lack of access to strong startup networks, poor funding prospects, lack of business knowledge, and many more,” said Richa Jaagi, co-founder of cannabis wellness startup Awshad.
In addition to societal prejudice, lack of representation also plays a significant role in women’s inability to make the leap.
“There is a great lack of networks of like-minded, large-scale women entrepreneurs. Whenever we talk about entrepreneurship, 80% of the room welcomes men with their ideas. I hope that at as we grow, we see a larger group of like-minded female entrepreneurs ready to tackle the economy, one business at a time,” said Swetha Kochar, Partner at PKC Management Consulting.
Additionally, the lack of a proper funding ecosystem also plays a significant role. Data from YourStory reveals that out of the 482 funding deals in the Indian startup ecosystem in the first quarter of 2022, only 78 were raised by startups founded and co-founded by women, representing only 16.18%.
Moreover, according to data from the 2019 report of the International Finance Corporation (IFC), more than 70% of the total financial needs of women entrepreneurs in the country are not met.
“Low involvement of the funding ecosystem is a significant barrier for women-led businesses. Some factors that can help women entrepreneurs are investments in startups or women-owned businesses, sharing knowledge or skills, community/social networking events, and creating better opportunities in the business ecosystem,” said Sakshi Vij, founder of Myles Cars.
Self-imposed biases based on societal conditioning also hinder their journey as leaders.
According to a recent report “Women’s Leadership in the Indian Development Sector” by India Leaders For Social Sector, 50% of emerging female leaders feel that they are sometimes hindered by their own self-limiting biases, such as impostor syndrome. At least 61% of women believe that the lack of adequate family support and childcare is a major obstacle to achieving their goals.
“Women in leadership positions face a range of barriers in the workplace; our research showed the persistence of patriarchal biases, with their legitimacy as leaders being questioned by male colleagues. Women are expected to treat their career as secondary to their personal responsibilities,” said Anu Prasad, Founder and CEO, India Leadership for Social Sector (ILSS)
How to get more women in the entrepreneurship game?
According to Deepthi Ravula, CEO of WE-HUB, although the government has many programs to support women entrepreneurs, the challenge lies in awareness and identification.
“The key we need is a platform connecting both the entrepreneur and the financial institutions. The way to solve this problem is to create more platforms (both physical and virtual) to enable collaboration between the two. This will solve the access challenge. It is important to bridge the digital divide for digital lending to identify, support and grow more micro-SMEs and women-led micro-SMEs in India,” Ravula added.
IFC report data shows female MSMEs face a $158 billion credit gap, 90% of which rely on informal sources of finance, indicating a lack of program awareness and poor implementation .
It is true that the number of bank accounts held by women has increased, but this does not mean that funds are available. In 2020, a study found that women only received 27% of the deposits they contributed as bank credit, compared to 52% for men.
Data from the 73rd round of the NSS shows that the amount of loans women entrepreneurs in India have access to is 50% lower than that of men.
Addressing the issues on the ground – providing opportunities for upskilling, mentorship and developing a supportive entrepreneurial ecosystem that gives women access to resources, a safe and secure work environment, and social and institutional support – is the best way to solving the problems that women entrepreneurs face.
Moreover, experts also believe that it is also important to encourage women to come out of the guilt of having done something wrong by devoting “family time” to business.
“Women have natural organizational and leadership skills that are an asset in any job. Plus, most have empathy and hard work in them from the start. They should be encouraged to see this,” said Jyoti Dabas, Co-Founder, Fittr and CEO, INFS.
(Edited by : Shoma Bhattacharjee)