India No Country for Women Founders

While India is third in the pecking order globally in the start-up ecosystem, women founders struggle to even get a start. Investors see them as less capable and hesitate to fund their ideas

Illustration: Saahil Bhatia Image used for representational purpose only

Renu Negi, a young woman entrepreneur in Delhi, who also works with various early-stage start-ups 
in scaling up their businesses, has often found her own data analytics start-up pitch being rejected by investors for reasons she believes are mostly vague. 

She says that rather than providing substantive reasons for why her pitch did not meet funding criteria, investors frequently cite excuses like, “But you are too young a woman to handle a data start-up", “What will happen after you get married and have children?”, “You need to bring in a male co-founder". 

Deepika Loganathan, co-founder and chief executive officer (CEO) of HaiVE AI, narrates her arduous journey. An early marriage (at 21 years) was the first hurdle. It was not until she relocated to Australia that she could co-found her start-up. She says that obtaining funding in India is difficult for women, making entrepreneurship a goal too far. 

Sadly, Negi and Loganathan are not alone in encountering gender bias. Despite India's position as the third-largest start-up ecosystem globally, women entrepreneurs continue to face challenges in getting funding. In a country where gender discrimination persists, overcoming societal barriers to pursue entrepreneurship is daunting. Experiencing gender bias when it comes to funding is yet another hurdle in the lonely struggle to make a mark in the professional world. 

While a cursory glance at data might suggest that the record low figures are due to the funding winter, a detailed analysis suggests that the number of women-founded start-ups has been declining for a decade; the current ratio of men-led tech start-ups and women-led tech start-ups stands at 245:1, which used to be 51:1 back in 2014. 

Jaya Vaidhyanathan, CEO of fintech company BCT Digital and  independent director on the board of PwC, an accounting giant, is not surprised by the figures. She says that the Indian start-up ecosystem reflects deep-rooted biases and barriers that women face, such as unequal access to the right networks, resources and capital necessary for success besides societal stereotypes questioning women’s leadership and entrepreneurial nous. 

“Even though venture capitalists may claim to be gender-agnostic, the reality is that unconscious biases and traditional investment patterns are still prevalent in India and often favour male-led start-ups despite the merit and potential of the female founder’s idea,” she says. 

An Unequal Battle 

Although many venture capitalists (VCs) claim that they judge pitches solely on the merit of the idea rather than the gender of the founder, a 2014 Harvard University study revealed that 70% of VCs favoured business pitches from male entrepreneurs over identical ones from female entrepreneurs. 

Avishek Gupta, managing director and CEO of Caspian Debt, an impact-investing firm, which has 33% women-founded start-ups in its portfolio, agrees that gender bias exists. He says that after overcoming societal barriers when women entrepreneurs come into the start-up ecosystem, their capabilities as founders and leaders are judged solely through the lens of gender; VCs are more likely to invest in male founders. 

“Even though a man too would get married and start a family, VCs would not question his career plans. Women entrepreneurs face more scrutiny when it comes to their commitments. Many VCs are also of the belief that the natural traits that come with being a woman, like empathy and kindness, might hamper the business, although that is not true,” he says. He goes on to add that VCs traditionally consider masculine traits to be more important for running a start-up. This is why VCs ask women founders to rope in a male co-founder.

Women VCs, though fewer in number, are more likely to invest in women and show confidence as they have overcome the same set of challenges, he adds.  

Aparna Thyagarajan, co-founder and chief technological officer at online retailer of Indian ethnic wear Shobitam and an angel investor at the business show Indian Angels, says that she was the sole investor from the panel to fund a woman-led business—HappieCurves—in the show. She says that VCs should focus on the business idea and not the gender of the presenter. 

The Women in India's Startup Ecosystem Report published by non-profit venture platform ACT in collaboration with Udaiti Foundation, a woman-centric non-profit, also suggests that despite the low presence of women in the founder and CEO positions, start-ups have 32% of women in managerial roles and start-ups founded by women have displayed a significant trend with 2.5 times more women in senior roles compared to those founded by men, indicating that women are more likely to hire women.

According to the report, women-led unicorns grew from 10% of the total number in 2017 to 18% in 2023. However, the bias remains critical. Of India’s 20 women-led unicorns, nearly 50% (Good Glamm, MobiKwik, Hasura, Mamaearth, Pristyn Care, OfBusiness, Rivigo and LEAD) have a male co-founder as well; the remaining 91 unicorns are solely led by men. 

In many cases, the male co-founder is the spouse of the female co-founder, as in the case of MobiKwik, Mamaearth, Pristyn Care and OfBusiness.

Breaking Barriers 

A 2020 report from management consultant Bain & Company estimates that India’s women entrepreneurs, when provided with equal access to resources are likely to create 150 million to 170 million jobs by 2023 and so far, have created only 27 million jobs. But the stress on “equal resources” is critical as the same report suggests that 75% of Indian women of economically active age are not engaged in formal work.

Seema Chaturvedi, founding partner of AWE Funds, an early-stage impact fund with a 100% portfolio of woman-founded or  co-founded start-ups, says that countries with greater gender inequality face significant economic losses, but closing the gap in women’s labour force participation could boost economic output by an average of 35%. Also, empowering women at the workplace would create an easier path for other women to follow. 

A recent survey—Women in Tech 2024—by ANSR, a consultant, shows that even those women 
present in the workforce say they do not have a voice on the table, lack equity in pay and often need to work harder to prove themselves. Diversity and inclusivity are often non-existent or superficial, 
they add.  

The decline in women-led start-ups raises a big question on the start-up ecosystem and its hypocrisy when it comes to providing equal opportunities to women founders in terms of funding, mentorship and networking platforms. India has created a total of 98,422 tech start-ups in the past 10 years; unfortunately, the number for women-led ventures stands at a meagre 1,204.  

Industry experts and women founders have been vehemently advocating for a transformative shift in venture-capital practices, urging investors to address the widespread gender disparities in funding by understanding gender differences and biases, investing in women-led ideas to improve diversity and inclusion within the system. 

Chaturvedi of AWE Funds sums it up, "While impact funds and gender-dedicated funds are instrumental in driving positive change, they are just one piece in the puzzle. Bridging the gender gap requires a collaborative effort involving investors, policymakers, industry leaders and support organisations.” 

Policymakers should implement gender-sensitive macroeconomic actions to support women’s economic empowerment, which includes investing in women’s human capital, addressing biases and increasing women’s representation in leadership positions, she adds.