Male Skew In Funding

HER PITCH at Shark Tank India did not work, but 28-year-old Purva Aggarwal recalls drawing a lot of attention after her appearance at the show, most of it unwelcome. “Several people reached out to me for funding. However, some requests made me uncomfortable,” recounts the New Delhi-based founder of Good Good Piggy, an app that teaches money management to children.

“I remember a person, who owned a hotel, calling up and saying he would be interested in funding my start-up and we could meet at his hotel to discuss the details,” she says. “He told me he was sending a car to pick me up. This made me wary. I thought would he offer that to a man?” she says. Aggarwal later tried institutional funding and found the system skewed towards men. “Most networking events start late and run till late in the night. Very few women attend,” she says.

In spite of efforts by the start-up ecosystem to counter biases, stories of fund-raising by most women entrepreneurs are replete with incidences of gender discrimination and uncomfortable questions, for example about family planning. While fund-raising is not smooth for anyone, such experiences make things harder for women.

According to data from start-up intelligence platform Tracxn, India has more than 8,000 start-ups founded by women. Only a little over 2,000 have been able to raise funds so far. Indian start-ups have till date received total funding of $161 billion. Of that, $23.9 billion has gone to start-ups that have at least one woman founder. The difference could be starker for companies where all founders are women.

Small Pool

While it’s tougher for women to raise funds, it is also true that fewer women are starting companies in India as compared to men. The blame mostly lies with the structure of society, say stakeholders. “There is a feeder problem here. India has one of the lowest women representations in workforce. A lot of women drop out of workforce between 25-40 years due to family responsibilities. Most companies are started by those who come out of the formal workforce, so fewer women are starting ventures and even fewer are raising funds,” says Vineeta Singh, CEO and co-founder, Sugar Cosmetics.

There is an unsaid expectation in Indian society that women will strike a balance between career ambitions and family obligations, which makes it difficult for them to remain in the workforce, especially high-commitment jobs and own ventures. “In many parts of the society, women face pressure to prioritise family over career ambitions. They are less likely to seek large investments requiring intense dedication and long working hours. This makes investors wary of women founders,” says Radhika Ghai, founder of beauty and wellness platform Kindlife and co-founder, ShopClues.The data on gender gap in the workforce is telling. India ranked 127 out of 146 in World Economic Forum’s Gender Gap Ranking index, behind Sri Lanka, Bangladesh and Nepal, in 2023. The latest Periodic Labour Force Survey released by the Labour Bureau for October-December 2023 said female labour force participation in urban areas was 25% compared to 74% for men.

“Due to societal pressures, entrepreneurship is not an aspirational career option for women in India,” says Madhura Dasgupta Sinha, founder and CEO, Aspire For Her, which motivates women to stay in the workforce. “To get a regular job and stay there requires hard work. Women have to fight a lot of stereotypes. Hence, entrepreneurship, which requires enormous courage and commitment, does not seem viable,” she adds.

Investors & Prejudices

The biases that stop women from starting up also play a role in fund-raising. Women founders say while most investors are politically correct, there is an inherent bias against women who are young and yet to be married or have children. “A lot of young women setting up enterprises are disappointed after initial investor calls. Though no investor says he will not fund a start-up as its founder is a woman, biases do play a role in decisions,” says Kanika Tekriwal, co-founder and CEO of aviation start-up JetSetGo. She says it is even tougher if the company is in a non-consumer or a technology sector.

A founder of an analytics company, which has raised funds in two rounds so far, says she was pushed by investors while raising a seed round to hire a male chief technology officer. “I came with 15 years of experience in technology and was confident I could head the business as well as the tech part. But investors wanted to see a man in the tech role,” she says on condition of anonymity.

As investors gauge the risk involved, women founders are frequently probed about family planning and commitment to the company. And more often than not, young women are asked to rope in a male co-founder to make the company a ‘less risky’ bet. “I am part of a group called Female Founders’ Group on WhatsApp and have seen umpteen screenshots of women being asked about their relationship with the male co-founder and the relationship risk involved,” says Singh of Sugar Cosmetics who was also asked to rope in a male co-founder when she launched her venture ten years ago.

Aarti Gill, co-founder and CEO of D2C nutrition brand OZiva, who married co-founder Mihir Gadani after starting the company, recalls investors asking if she would remain the CEO after marriage. Of the top 20 women founded start-ups by funds raised, none has a women-only team.

Experts and women from the start-up ecosystem say prodding questions start early, that is, during seed or pre-seed funding as angel investors tend to invest in companies where venture capital (VC) firms will show interest. Most angel investors get an exit if VCs come into the picture and, hence, have to gauge a company on same parameters as VCs.

The journey, however, does not get easier even after initial funding. “The questions have remained the same,” says a founder in her late 40s. “When I was trying to raise capital in 2009 while expecting my second child, I was asked how I was going to manage and who would take care of my kids. Now, I am asked if I will move to U.S. because my elder child is in college there. They conduct due diligence of my personal life even after I have been in the ecosystem for so long,” she says.

A Lonely Journey

OZiva’s Gill narrates an incident from early in her career when a male counterpart snagged a meeting with a top honcho at Sun Pharma after sending the mail five times. “Back then, I would have thought ten times before approaching someone,” she says.

Most women founders agree that inhibitions and even qualities such as humility and pragmatism do not help women in their entrepreneurial journey. “Men can be very futuristic and at times even exaggerate a bit in pitch to investors but women tend to be realistic. That does not work in our favour as investors conclude we are not positive about our growth potential,” says Megha Gambhir, founder and CEO of sports technology company Stupa Sports Analytics.

Entrepreneurship is also a lonely journey for women due to lack of access to networks or mentors. Gill of OZiva, for instance, says she knew that her business model was not quite right in the first half of her journey but could not refine it due to lack of mentors.

Seema Chaturvedi, founder and managing partner, Achieving Women Equity Funds, a gender lens-focused fund, says women do not have the same access as the time they should have spent networking or building their mentorship base is spent at home taking care of young ones or family.

Other Side Of The Table

Although women entrepreneurs lack access to the ‘old boys club’, they have found their own ways to establish connections. One of them is WhatsApp groups. “I am part of a group where interesting conversations are happening. The other day, a founder told others she is pregnant and sought advice about when to disclose this to investors, while someone else reached out to understand how to hire a CFO,” says Ghai of Kindlife. “The change has started,” she adds.

The emergence of several women-focused funds and attempts by Limited Partners to bring more women to the forefront are also helping. Prominent funds supporting women include Achieving Women Equity, spearheaded by Seema Chaturvedi, Kalaari Capital’s CXXO initiative and Sequoia’s Spark Fellowship. She Capital is an early-stage VC fund that invests in women-led businesses. “The biggest thing that government can do is promote women fund managers. This will have the biggest multiplier effect,” says Chaturvedi of AWE.

These steps will create more successful examples, which will inspire the next generation. “If more women opt for entrepreneurship and succeed, they will become role models for the next generation,” says Singh of Sugar Cosmetics.