By Anuradha Ramachandran
Fintech firms founded by women rarely get adequate capital even though they could aid our economy in much-needed ways
Indian fintech is blessed with some remarkable women entrepreneurs. I am privileged to work with the likes of Lizzie Chapman and Priya Sharma, two of the three co-founders of ZestMoney, as well as Sucharita Mukherjee, co-founder of Kaleidofin, for example. They are pioneers in two senses. Their innovations have helped create a fairer, more inclusive financial system, and they have helped clear the path for more women to set up and lead such businesses.
Women have also founded companies offering flexible work platforms, like FlexingIt and Jobsforher, which allow more women to participate in the workforce. And we are beginning to see venture capital funds focused on supporting women entrepreneurs. She Capital, for example, aims to replicate the success of America’s Female Founder Fund and foster much-needed diversity among the founders of Indian unicorns.
All of this is welcome news. Having more female entrepreneurs means that society as a whole benefits from the insights, talent and drive of half the country’s population. In spite of a few extraordinary exceptions, though, the reality is that women are missing out as technology entrepreneurs—and as a result, India is missing out as well.
So far this year, a record nine startups have reached the coveted valuation of $1 billion or more, according to Inc42’s State of the Indian Startup Ecosystem report. Among single-founder unicorns, there are no female founders; among those with multiple founders, just 4% are women.
The situation is only a little better for the next wave of successful startups. Fewer than 13% of India’s ‘soonicorns’—those closing in on the $1 billion mark—have a female co-founder, according to Inc42. While women entrepreneurs are better represented in businesses that sell to women, there are too few in the technology startup ecosystem.
These numbers mirror broader trends in our economy and society. Most Indian women stay at home. Fewer than 20% participate in the workforce, versus 76% of men. Women who do work earn an average 65.5% of what their male counterparts earn for doing the same work (bit.ly/3hKftDw). It’s hardly surprising that the World Economic Forum’s 2021 Gender Gap report ranks India No. 140 among 156 countries on its measure of workplace diversity (bit.ly/3kyUpSe).
Even in India’s banking and financial services sector, where women leaders have long thrived, there are fewer women in senior management positions than there were five years ago. At that time, State Bank of India, ICICI Bank and Axis Bank were all run by women.
Consider education and funding gaps. As you can imagine, India’s gender inequality leads to disadvantages for female tech entrepreneurs. It impacts their self-confidence and can take a toll on their networks. But there are bigger obstacles that are structural and have to do with access to education and capital. It’s well known that women are underrepresented in India’s premier universities, from which most founders of successful startups emerge. Just 18% of Bachelor of Technology students at the Indian Institutes of Technology, for instance, are women (bit.ly/3BjPD11). However, I believe that raising venture capital, the lifeblood of tech startups, poses the most immediate concern for women entrepreneurs. Many who I know are haunted by a study published by the Harvard Business Review in 2017. It showed that, among a comparable group of startups, male-led ventures raised five times more money than those led by women. The study also found a pattern of venture capitalists asking men more questions about opportunity and women more questions on risk. This study matched women’s own experience (bit.ly/2UZgTAU).
While that research was conducted five years ago (at TechCrunch Disrupt New York), we see the same dynamic playing out in India today. According to a MAKERS India study, funding for tech startups with at least one woman founder accounted for less than 6% of total funding between January 2018 and June 2020 (bit.ly/3hNQVcL). To be sure, India is not alone in this and covid has made matters worse. Globally, women found it harder than men to raise funds for new ventures over the past year. Funding for female founders in the US fell by 31% in 2020, but just 16% for all-male teams, according to Pitchbook (bit.ly/3hM9AWf).
It’s time to pay attention to the state of women founders and female executives in India. And it’s in all of our best interests to increase the number of female founders and women executives in the next generation of startups. We must ensure that more women like Lizzie, Priya and Sucharita have the opportunity to break through and build companies.
Role models like these give younger women and girls confidence in their ambitions. We also need to empower the next wave of young female students and women technologists, founders and executives with better mentoring, and work together to encourage their enrolment—and acceptance—in science, technology, engineering and mathematics courses and degrees at top universities.
As a female venture capitalist, I’d like us all to listen more to India’s small but indefatigable group of successful women entrepreneurs. We need to understand what they had to overcome to secure funding for their ideas—and how we can begin to remove the obstacles and unconscious biases they face. This is going to be vital to ensuring that the problems observed in that infamous HBR article do not continue to play out in India.
Helping our most talented women entrepreneurs rise to the top and attract funding for their ventures would be a win for women and a win for India. Before the launch of Aadhaar cards, men were 20% more likely to have a bank account than women, according to the International Monetary Fund. That gap has since shrunk to 6% or less. With more women fintech entrepreneurs, we can go much further in improving many other measures of financial inclusion for women and other underserved groups, thereby creating a fairer financial system and a healthier economy.
Anuradha Ramachandran is investments director, Flourish Ventures