Why Women Entrepreneurs Face Difficulty In Raising Funds For Their Startups

Women entrepreneurs often get a male co-founder onboard to make the funding process easier
Why Women Entrepreneurs Face Difficulty In Raising Funds For Their Startups
Image credit: Franchise India Startup Summit
Entrepreneur Staff
Chief Correspondent
4 min read

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Being an entrepreneur is tough. When you are a woman trying to make a mark in a male-dominated space—men constitute 86 per cent of Indian entrepreneurship—the challenges manifold and there are bigger mountains to climb.

“People are still apprehensive about a woman running a business. This is true for both, the employees working in the company and investors looking to invest in the business,” said Malika Sadani, Founder and CEO, The Moms co, at the startup summit 2019, powered by Entrepreneur India.

It is no surprise then that women constitute only 14 per cent of the total entrepreneurs in India, as per the sixth Economic Census released by the Ministry of Statistics and Programme Implementation in 2018.

Difficult To Raise Funds

Most speakers in the panel voiced a common challenge they have faced as women entrepreneurs—difficulty to raise funds from investors. They argue that this challenge is mainly the result of gender bias, like any other workspace. “During the first rounds of raising funds for my startup, investors were more keen on talking to the male co-founder rather than me,” recalled Sadani. “It took me a long time to establish that I lead my business and have an equally important role to play as my male co-founder.”

A recent study by HSBC Private Banking, She's The Business, has revealed statistics in support of this argument. As per the report, more than one third of female entrepreneurs face gender bias while raising capital for their business. In such a scenario, it is important that women do not bog down and pass on the leadership role to men. “Women need to stop shying away from leadership roles and start running the show themselves,” added Sadani.

Divya Jain, CEO and Co-founder, Safeducate, shared a similar experience starting up her business, which is backed by Safexpress run by her father-in-law Pawan Jain. “At the beginning people did not take me seriously. They believed that I was just the face of the company whereas my father-in-law was actually running the business,” said the founder of the skill development company that trains workers for logistics and supply chain industry. “When I would go for meetings, people asked me if they could meet my father-in-law or husband instead.”

Another major reason for women facing difficulty in raising funds is lack of women investors and mentors in India, feels Aditi Balbir, Founder, V Resorts. “The number of women VCs in India is miniscule. Men may not always comprehend a woman's perspective properly. Shared experiences and interests between women investors and entrepreneurs can at least solve the problem of gender bias in the funding process,” she said at the summit.

Overcoming Gender Stereotypes

Social norms and gender roles are the other major reasons for investors’ lack of faith in women entrepreneurs. Women’s work has often been relegated as ‘part-time’ or ‘hobby’. The same mindset runs in the startup ecosystem as well where women's commitment to their business is closely canvassed by investors through questions related to their work-life balance. “For the longest time, one repeatedly asked question to me during my meetings with the investors was—are you doing this full-time,” Sadani pointed out.

Similarly, industries historically dominated by men are not quite receptive to women entrepreneurs. Jain explained that part of the reason why people did not take her seriously was that she was trying to make a mark in the logistics and supply chain industry, which is seen as men’s space. “No one expects a woman entrepreneur in the logistics sector. The mindset is that it is a tough space that can only be run by men.”

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