India is now home to 105 unicorns and about 5,000+ registered startups. However, here too, men dominate the entrepreneurship scene more than women. We spoke to Julia Karst, Head of Project Her&Now about how the state of affairs at startups and how women entrepreneurs were faring as compared to men, and specifics about work challenges. Here’s the complete interaction:
Which are the top five domains for women entrepreneurs to start their enterprises in India?
The data available from Edelgive Foundation (2020) suggests that the majority of women entrepreneurs in India are in the retail domain (38%), followed by service delivery (35%) and the manufacturing domain (27%), respectively. In terms of sectors, the top sectors for women entrepreneurs are food/edibles (30%), beauty/fashion (28%), household items (22%), handicrafts (13%), and health/education (4%). The data from our project shows a similar trend, wherein food processing, textiles/handloom, and handicrafts are the top sectors where women start their entrepreneurial journey in India.
How are women entrepreneurs faring in India v/s their global counterparts?
The rise of the startup ecosystem in India has changed people’s mindset toward entrepreneurship. The country is witnessing a steady rise in entrepreneurial activities, where women are actively making their mark in the ecosystem. According to a study from Bain & Company – Google 2019, 20% of India’s micro, small and medium enterprises are owned by women, compared to 1 in 3 women-owned businesses worldwide (GEM 2021).
Accelerating the quality and quantity of women entrepreneurship in India could create 150-170 million jobs by 2030 in the country, a vast economic potential that remains untapped. Women-led enterprises in India face multiple barriers affecting all stages of their entrepreneurial journey. Be it access to funding and markets, lack of awareness of the available support schemes and initiatives run by the government, lack of knowledge of business management, financial management, and digital literacy skills, and exclusion from business networks. Balancing business with family and home duties is another major challenge. These challenges faced by women entrepreneurs stem from the deep-rooted gender biases because of traditional social, and cultural norms.
How easy or difficult is it for a women entrepreneur in India to seek funding?
Data from IFC from 2019 reveals that only 10% of women entrepreneurs avail finance from formal financial institutions. Similar findings emerged from a survey by the Edelgive Foundation in 2020, where only 9% of women entrepreneurs had availed of any business loans. The reasons why it is so difficult for women to seek funding from formal financial institutions are complex. First, most women-owned enterprises are informal, barring them from accessing formal financial institutions. Those women entrepreneurs whose enterprises are technically eligible for financing are afraid of defaulting on loan repayments. The lack of confidence stops women from taking loans. Moreover, among those applying for finance from formal financial institutions, many women entrepreneurs could not provide the necessary collateral (representing about 13.5% of women entrepreneurs in a study by IFC from 2019). Among those women entrepreneurs, who sought external finance from formal financial institutions, the average loan amount sanctioned was only about 68% of the required amount (IFC 2019). Hence, women entrepreneurs’ financing needs in India are severely underserved.
What core skills help entrepreneurs start up successfully?
1. Ability to take risks and scale business. Risk-taking enables and encourages innovation and can be an important product/service differentiator. Taking risks is essential in enabling the business to scale.
2. Business competencies – Strategy, finance, hiring (a good incubation programme usually equips entrepreneurs with these skills). Entrepreneurs need to develop strategies to develop their businesses, explore sources of capital and develop a sustainable and talented workforce, among others.
3. Networking – Right from finding the right hire to raising investments, networking is critical to the success of an entrepreneur.
4. Leadership – Leadership is a vital management skill. Effective leaders provide clarity of purpose and motivate and guide the team to realise its mission.