Madhureeta Anand, an Indian filmmaker and founder of Phree, a women’s safety start-up, recalls her arduous journey of raising funds for her start-up. “They ask questions like, being a woman, are you even dedicated to the business?” she says. “I’m sure when a man and a woman go out to raise funds with the same idea, the man is more likely to get it,” she further adds, highlighting the disparity. Pia Singh, chairman of the DLF Foundation, eventually invested in her venture at the outset.
She is not alone in facing this bias. Reports indicate that women founders in India consistently encounter societal obstacles and stereotypes when seeking funding for their ventures, particularly within the predominantly male-dominated venture capital ecosystem. According to a Tracxn report, funding for women-led tech start-ups has plummeted to its lowest point in seven years. Shockingly, only nine women-led ventures emerged among the 2,210 overall start-ups—a decade low, underscoring the urgency of addressing this disparity.
Over time, both the venture capital and investor communities have acknowledged this bias and implemented measures to rectify the gender disparity within the predominantly male-dominated realm of start-up venture finance.
An example of such an initiative is the emergence of gender impact funds, or gender-focused funds, specifically aimed at tackling the evident gender disparity in the venture capital arena. Their objective is to facilitate greater participation of women in the entrepreneurial landscape, which is predominantly male-dominated.
The need of the hour
As per the International Finance Corporation (IFC), the private sector arm of the World Bank, female entrepreneurs received a mere 5.2 per cent of the total outstanding credit provided to enterprises by Indian public sector banks. Moreover, reports also state that women are more likely to either self-finance or bootstrap their businesses due to a lack of funding opportunities for women. This, in the long run, becomes a challenge for the woman to sustain in the market, while the industry might attribute this to a failure of weak leadership.
Archana Jahagirdhar of Rukam Capital boldly states that until women don’t control money, they can’t be in positions of power. Hence, the need for women-dedicated funds and more women investors joining the start-up ecosystem is an undeniable call to action.
Numerous contemporary gender-focused funds and programs designed for women entrepreneurs are striving to rectify the disparity. While these funds may offer modest investment amounts, they serve as crucial initial support for female founders whose ideas face rejection from male venture capitalists.
Several prominent funds dedicated to supporting women-led businesses include Achieving Women Equity (AWE), spearheaded by Seema Chaturvedi, which aims to finance 15 women-led start-ups with a corpus of Rs 350 crore. Additionally, Kalaari Capital's CXXO initiative has allocated $10 million for start-ups founded by women. Similarly, Sequoia's Spark Fellowship offers women entrepreneurs equity-free grants of $100,000, while She Capital is an early-stage VC fund focused on investing in women-led businesses.
These initiatives not only provide start-ups with essential funding but also offer invaluable support through mentorship, networking opportunities, training, and access to resources, fostering further growth. Furthermore, there are similar programs such as Rebalance, led by Aishwarya Malhi, which is an equity-free, early-stage scale-up program dedicated to accelerating women in entrepreneurship and venture capital. Similarly, WINPE (Women In Private Equity) is a nonprofit platform committed to enhancing gender diversity within PE/VC firms.
Priyanka Gill, co-founder of Good Glamm Group, who has recently joined Kalaari Capital as a venture partner and the head of its CXXO initiatives, states that the gender divide in both the VC as well as the start-up ecosystem is evident, and initiatives such as Kalaari’s CXXO help more women come ahead and scale up their companies. “Being a woman founder and now an investor, I know the challenges women face in raising funds, and I have empathy for their business ideas as a woman, which might be lacking in the male-dominated VC ecosystem, which leads to the huge gender disparity,” she adds.
Echoing Gill’s sentiment, Seema Chaturvedi, founding partner of AWE Funds, states that impact funds prove to be vital for addressing the gender gap in the entrepreneurial ecosystem, as they aim to tackle the systematic barriers and biases that have historically disadvantaged women entrepreneurs. She acknowledges that while progress may be slow, gender-dedicated funds are crucial starting points for catalysing change.
The immediate need to fill the gap
Despite India's third-place ranking in the global start-up ecosystem, the statistics concerning Indian women in business remain troubling. Industry leaders contend that while gender-specific funds are vital, they are only one part of the solution and cannot adequately address the gap without collaborative efforts from investors, venture capitalists, and policymakers.
Shefali Chhachhi, co-founder and partner at Hearth Ventures, states that while VCs might not discriminate between men and women intentionally, there are natural biases, and it is high time investors and venture capitalists actively recognise and challenge the gender biases ingrained in the evaluation and funding procedures. She sums it up by saying that the color of the money, “pink” or "blue,” shouldn’t be the criteria for judgment, and what truly matters is the value it will generate in the future.
