Archana Jahagirdar Writes: How to Remove the Gender Gap in Entrepreneurship

With an impressive tally of 1.59 lakh start-ups, India currently has the world’s third-largest start-up ecosystem. About half of these recognised start-ups, 73,151 to be precise, include at least one woman director. This is a landmark shift considering that barely five years ago, a pilot study conducted by RBI on the Indian start-up sector, found only 5.9% of the participating start-ups were founded by only women in comparison to 55.5% by only male founders.

These data points, widely celebrated in the media, however, represent only one side of the picture. When we widen the lens beyond the watertight definition of start-ups, a different picture emerges.

According to the Sixth Economic Census, women entrepreneurs own only 13.76% of the total number of establishments. Incidentally, about 34.3% belong to agricultural activities, with livestock dominating therein with a share of 31.6%. These women-owned rural enterprises give employment to 22–27mn people, but the majority of these are self-financed subsistence enterprises.

India’s ranking on the Mastercard Index of Women Entrepreneurs made up of 57 out of 65 economies isn’t exactly stellar either. It will take an estimated 36 years to close the gender gap. In India, chances are, it could take longer.

Omnipresent Stereotypes

Underlying this dismal representation lie constraints pertaining to traditional gender dynamics and social norms rooted in patriarchy. Women are subjected to gender stereotyping early on. Their identity is typically moulded into the roles of homemakers and caregivers. This stereotyping is omnipresent—in the immediate family, in schools, in the media and in society at large.

This deeply impacts the aspirations and confidence levels of women. It, further, colours the perception of potential investors and stakeholders who doubt the leadership and risk-taking abilities of women. Resultantly, women entrepreneurs in India have lower access to formal credit compared to their male counterparts. Their pitches are often subjected to bias and scepticism.

India closely mirrors the global landscape in this regard. Globally, 400mn women entrepreneurs face a $17trn financing gap. This gap is particularly acute in lower-income countries such as India and must be addressed in earnest considering that gender parity in entrepreneurship is estimated to add $5–6trn in net value to the global economy. Irrespective of this takeaway, venture capital funding for women fell from 14.71% in 2021 to 9.3% in 2023.

High Stakes for India

The stakes are higher for India due to the declining labour force participation. The covid-19 pandemic has undoubtedly impacted women more than men—54% of those who lost their jobs were women and 90% of them didn’t return to work. Currently, only 32% of married girls and women aged 15–49 are employed.

Entrepreneurship is, therefore, an excellent avenue to ensure effective participation of women in the labour market. Start-up India, the government’s flagship initiative, has rolled out several programmes since 2016 such as Super Stree Women in Start-ups and Women Rise Together to support women entrepreneurs. The Niti Aayog too has a Women Entrepreneurship Platform to extend support through mentorship, incubation and acceleration.

Despite the key elements of a thriving ecosystem being in place, a lot of ground remains to be covered. Perhaps it is time to revisit and reimagine the policy framework and the processes.

To begin with, gender sensitisation workshops must be conducted at the school level itself to break the gender stereotypes that exist socially. Also, more innovative technical, financial, as well as policy-level initiatives need to be deployed to encourage and empower women entrepreneurs. Gender gaps in terms of pay and financing need to be narrowed and eventually removed. Gender neutral, fiscal stimulus measures must be put in place.

Increasing diversity in the venture capital industry will also move the needle towards positive perception. In fact, an umbrella approach must be adopted wherein venture capitalists, corporates and non-profit organisations play their respective roles in creating an enabling network of women entrepreneurs to thrive.

Fortunately, these are the actionable silver linings that can facilitate greater access to opportunities for women across the start-up ecosystem.

A Classic Case

An interesting trend pointed out by the Global Entrepreneurship Report 2023–24 deserves mention in this context. It says, women tend to prioritise social impact when it comes to entrepreneurship and are about 10% more likely than men to prioritise sustainability goals over economic goals. It points out how the younger generations of entrepreneurs are driving market solutions through social ventures to compelling problems such as climate change, health disparities and economic inequality.

We have the classic case study of Shri Mahila Griha Udyog Lijjat Papad that can silence any detractor. Over 65 years ago, seven women borrowed Rs 80 to start an enterprise that today employs more than 45,000 women across 16 states in India and exports its products globally. With a turnover exceeding Rs 1,600 crore, this women-led start-up has not only scored high in its balance sheet but also in terms of social impact.

The instrumental role women entrepreneurs can play in socio-economic development of a country is beyond the purview of this debate. Women are not even as risk averse as they are made out to be. In fact, women in India have been found to be less deterred by fear of failure than men. All they need is an enabling environment.

The writer is founder and managing partner of Rukam Capital