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The journey of India’s women-led startups to beat gender funding gap

funding for Women led startups

Aditi Bhutia Madan, an Indian businesswoman, reminisces about her childhood in Darjeeling, where memories of pine forests, Himalayan sunrises, and her grandmother’s momos inspired her to establish her own company. However, Madan faced a significant obstacle that many female entrepreneurs in India encounter: limited access to formal financing to grow her business, Yangkiez By MomoMami. She struggled with high-interest loans from loan sharks and demands for equity stakes in her business.

To overcome these challenges, Madan joined the Women StartUp Programme (WSP) at NSRCEL, a business incubator at the Indian Institute of Management Bangalore. Through this program, which provides training in essential business skills and the art of pitching for financing, Madan gained the necessary knowledge and skills to access financing opportunities. She even had the opportunity to present her business pitch on Shark Tank India, resulting in securing 7.5 million Indian rupees ($91,000) from investors to enhance her company’s production units.

The Barriers that Women entrepreneurs face

In India, women entrepreneurs face numerous barriers, including unequal access to capital. Women-led businesses encounter a credit gap of over $11.4 billion, and female entrepreneurs receive only 5.2% of the outstanding credit granted to enterprises by Indian public sector banks, as reported by the International Finance Corporation (IFC). Additionally, cultural biases and discrimination play a significant role in hindering women’s access to financing. Many potential investors view women entrepreneurs as less investment-ready and consider factors like age and marital status, which are rarely asked of male entrepreneurs.

Addressing this funding imbalance, Anisha Singh established the She Capital fund five years ago to support women business founders. Despite evidence that startups founded and co-founded by women generate more revenue and jobs, banks remain hesitant to fund female entrepreneurs and sometimes require a male relative’s signature on loan applications. Public sector banks also pose challenges, with over 85% of women entrepreneurs facing difficulties in accessing loan services, as reported by the Bharatiya Yuva Shakti Trust (BYST).

Baby steps, but a long road ahead

While the Indian government has financial support schemes for female-led enterprises, only a small percentage of women entrepreneurs have benefited from them. Poor access to professional communities and networks exacerbates the information gap regarding funding sources and market information for women entrepreneurs.

To address these issues, programs like the WSP offer a supportive community for women entrepreneurs, counteracting the male-dominated business landscape. Such initiatives provide training on essential skills like pitching to investors, empowering women to realize their full potential. By equipping women entrepreneurs with the necessary tools and resources, they can overcome financing obstacles and thrive in the business world without having to rely on others to speak on their behalf.

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