Female entrepreneurship

The Indian economy is continuing to grow every decade and startups are turning out to be the engines driving this growth. Despite being the third largest startup nation and having over 27,000 startups, India still has only 5% women startup founders. This figure highlights the multi-layered challenges faced by female entrepreneurs. 

The risk-return ratio of becoming an entrepreneur is influenced by various factors, including gender, age and socioeconomic status. The parameters of assessing risk and reward are markedly different for male and female entrepreneurs. This ratio can be extremely skewed for women entrepreneurs as they often face the added risks of social stigma and familial exclusion while pursuing their business ideas. This often makes being an entrepreneur for a woman much less rewarding. However, the perception of rewards for women has changed in recent years due to pointed measures taken by different stakeholders. 

Investors have been motivated to set up female-oriented funds to encourage entrepreneurship and the availability of capital for women entrepreneurs. Access to capital for early stage startups is strongly influenced by the startup’s founding team, influencing evaluations of women-only team. With the launch of female focused funds as well as the growing presence of women in VC & PE firms, these traditional barriers have been removed.

The incubators today are also looking to encourage startups by women by conducting workshops and employing female mentors. These mentors go much beyond providing traditional mentorship and help these entrepreneurs overcome barriers, particularly those associated with their gender roles. 

Even though the above stakeholders have made a positive impact on women entrepreneurship, the role of government in this domain is often not highlighted enough. In its capacity, the Indian government is focused on encouraging more and more women to be financially independent and open their own enterprises up by bringing out numerous new schemes, some of which are highlighted below:

  • Startup India has launched a nation-wide women entrepreneurship program (WING) that organizes two types of workshops targeting entrepreneurs; advanced workshops for existing innovators and basic workshops for aspiring innovators. The basic workshops consist of knowledge sharing on how to pitch, how to kickstart one’s entrepreneurship journey while the advanced workshops are focused in the capacity-building of female entrepreneurs. 
  • Standup India facilitates bank loans between INR 10 lakh and 1 crore to at least one woman per bank branch in the country for setting up a greenfield enterprise. This enterprise may be either in manufacturing, services or the trading sector. In the case of non-individual enterprises, at least 51% of the shareholding and controlling stake should be held by either an SC/ST or a female entrepreneur. 
  • Trade Related Entrepreneurship Assistance and Development (TREAD) scheme for women assists in the form of a grant of up to 30%t of the total project cost for promoting entrepreneurship among target groups of women. The remaining 70% of the project cost is financed by the lending agency as loan for undertaking activities as envisaged in the project. The NGOs can utilise the grant for training, counselling and tie-ups for marketing on behalf of the beneficiaries besides their own capacity building for assisting women. 
  • Rashtriya Mahila Kosh is giving out multiple loans under their schemes to encourage women to create wealth and assets. One of their schemes is specifically focused on providing loans to new and smaller organizations with an experience of at least six months in thrift & credit. The organization can avail a maximum loan up to INR 10 lakhs under this scheme to 'start'-up. 
  • MUDRA, which stands for Micro Units Development & Refinance Agency Limited, is a financial institution set up by Government of India for refinancing small businesses including startups. The purpose of MUDRA is to provide funding to the non-corporate, small business sector through various last-mile financial institutions. MUDRA loans are available in three categories based on the growth and development of a business.

The focused efforts by multiple stakeholders across the ecosystem will benefit in creating a gender-inclusive ecosystem and driving India’s performance on several gender parity indices. However, a stronger push is needed to encourage private and government players to do more for women entrepreneurs. There is a need to provide more incentives for women who want to 'start'-up and make their perception of rewards in entrepreneurship, more gratifying. But these efforts alone might not be able to bring the desired changes as the first step of informing women about already existing programs is lacking- many women remain unaware of the multiple incentives offered by the government and non-government players in this area. Therefore, a two-fold approach is needed- firstly to create awareness about existing programs and secondly to push for more such successful programs- thus, empowering more women to 'start'-up.