Women's Entrepreneurship Day: Only 20 percent of MSMEs are owned by women. Will Falguni Nayar's Nykaa startup success change the landscape of women and business? Well, time will tell. Meanwhile, we spoke to experts and tried to understand how the knot — of gender gaps, guilt, financial hurdles, lack of awareness of schemes and multiple biases, including self-imposed ones, — can be untangled to ease more women into corporate hot seats.
In 2012, investment banker-turned-entrepreneur Falguni Nayar launched Nykaa with the tweet “Beauty gets a new name.” Eight years later, Nayar created history when Nykaa became the first solo-woman founded startup in India to become a unicorn. Last year, the company, FSN E-Commerce Ventures (parent company of Nykaa) also became the first profitable unicorn to go public.
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Nayar's story is inspiring to many young women entrepreneurs out there trying to build their presence in the world of business, which is largely dominated by men.
In fact, according to data by media organisation Inc42 as of May 2022, only 15 percent of Indian unicorns has at least one female founder. According to 2020-2021 report by the Ministry of Small, Micro and Medium Enterprise, only 20 percent of MSMEs are owned by women.
The data also revealed that 79 percent of these unicorns, which have at least one women founder, were incorporated after 2011 showing that the last decade had more women coming into entrepreneurship. This indicates some progress but also highlights the gender divide.
Women's entrepreneurship plays a crucial role in India's labour market because it catalyses their participation in the labour force which in 2020-2021 as per the Periodic Labour Force survey stood at 25.1 percent.
“In our country, women are the primary caregivers of the family. Owing to this responsibility, a large portion of the women workforce decide to quit their job post maternity. Many, in fact, don’t come back because of norms in the society and lack of support by the employers,” said Smitha Rao, Co-Founder of Utthunga, an industrial IT firm,.
As per data published in 2020 from gender research and advocacy organisation, 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 57 out of 65 in Mastercard Index of Women Entrepreneurs 2021 global ranking.
Recently, Finance Minister Nirmala Sitharaman, addressing a women director's conclave at BSE headquarters in Mumbai, urged women entrepreneurs and corporate leaders to take up leadership roles and said boards cannot continue to remain as a "men's club." The question although here is what’s stopping the women?
What’s stopping the women?
“Among the most obvious or common ones such responsibility of running a household and lack of family/spousal support, there are many other roadblocks that women face when pursuing their entrepreneurial journeys, such as lack of access to robust startup networks, poor funding prospects, lack of business knowledge, and many more,” said Richa Jaagi, Co-Founder at cannabis wellness startup Awshad.
Apart from societal biases, lack representation also plays an important role in women not being able to take the step forward.
“There is a big lack of networks of like-minded, scaled women entrepreneurs. Whenever entrepreneurship is discussed, 80 percent of the room has men with their ideas. I hope that as we grow, we see a wider group of like-minded women entrepreneurs ready to take on the economy, one business at a time,” said Swetha Kochar, Partner at PKC Management Consulting.
Added to this, lack of a proper funding ecosystem also plays an important role. Data by YourStory reveals that of the 482 funding deals in the Indian startup ecosystem in the first quarter of 2022, only 78 were raised by women-founded and co-founded startups, which account for just 16.18 percent.
Moreover, as per data by the 2019 International Finance Corporation (IFC) report, over 70 percent of the total finance requirement of women entrepreneurs in the country is unmet.
“Low involvement from the funding ecosystem is a significant barrier for women-led enterprises. Some factors that can help women entrepreneurs are investments in women-owned startups or businesses, knowledge or skill sharing, community/social networking events, and engaging better opportunities in the business ecosystem,” said Sakshi Vij, Founder, Myles Cars.
Self-imposed biases based on the societal conditioning also hinder their journey as leaders.
As per a recent ‘Women’s Leadership in the Indian Development Sector’ report by India Leaders For Social Sector, 50 percent of emerging women leaders feel that they are, at times, hindered by their own self-limiting biases, like imposter syndrome. At least 61 percent of women believe that lack of adequate family and childcare support is a key barrier for them to achieve their goals.
“Women in leadership face a range of barriers in the workplace; our research showed the continuance of patriarchal bias, 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 & CEO, India Leadership for Social Sector (ILSS)
How to have more women in the entrepreneurship game?
According to Deepthi Ravula, CEO, WE-HUB, although the government has many schemes to support women entrepreneurs, the challenge lies in awareness and identification.
“The key thing we need is a platform connecting both the entrepreneur and the financial institutions. The way to fix this is by creating more platforms (both physical and virtual) to enable collaboration between both of them. This will solve the challenge of access. Bridging the digital divide for digital lending is important to identify, support & scale more women-led and micro-SMEs in India,” added Ravula.
Data by IFC report shows that women MSMEs face the credit gap of $158 billion, with 90 percent relying on informal sources of financing — indicating the lack of awareness of schemes and improper implementation.
It is true that the number of bank accounts held by women has increased, but that does not imply that funds are available. In 2020, a study found that women received only 27 percent of the deposits they contributed as bank credit compared to 52 percent for men.
Data from NSS 73rd round shows that the amount of loan accessed by women entrepreneurs in India is 50 percent lower than men.
Addressing the issues at the ground level — providing upskilling opportunities, 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 address the issues that women entrepreneurs face.
Moreover, experts also feel that encouraging women to come out of the guilt that they are doing something wrong by giving the ‘family time’ to business is also important.
“Women have natural organisational and leadership skills which are an asset in any work. Further, most have empathy and hard work wired into them from the beginning. They should be encouraged to see that,” said Jyoti Dabas, Co-Founder, Fittr and CEO, INFS.