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Last Updated : May 19, 2016 11:18 AM IST | Source:

Challenges faced by women entrepreneurs to raise funding

Entrepreneurship was once considered a man‘s territory, but with each passing year women are taking the plunge and leading their own enterprises. This however, does not come without its own challenges.

Entrepreneurship was once considered a man’s territory, but with each passing year women are taking the plunge and leading their own enterprises. This however, does not come without its own challenges. As we already know, raising funds from an investor is a tough task for any business owner. However, on many fronts, the task gets even more challenging if you are a woman trying to generate funds for your business.

A lot of women entrepreneurs face huge challenges in raising funds. Some key learnings I have had from my experience:

1. Sector : Most women led businesses are not in the “typical” sectors that seek funding from external sources, eg. Tech based businesses. This implies that both the degree of visibility of women led businesses in the market and their viability/feasibility in the eyes of VCs is automatically reduced.

2. Banks/Loans not available: Banks while claiming to have loans for women, always ask for some collateral, or give loans to profitable businesses only. This negates the idea of the loan completely, making it difficult to raise amounts from this channel as well. Research shows that the loan approval rates for women are 15-20% lesser than that of men (cited from Bizz2credit), a disappointing statistic in the era of breaking the glass ceiling and women empowerment.

3.The Family story: At every VC meeting that I have had, the question of how many children do you have, who manages the children, what does the husband do, what family support exists, have been subtly, but surely asked. Despite the fact that these questions are in no way indicative of one’s capabilities as an entrepreneur, they have continuously surfaced. The inevitable idea that a woman cannot prioritise her business like man does, seems to be the trend. This is a huge challenge to overcome.

4. VCs fund their own: The trend has always been for VCs to fund people from their tribe. Typical example being the IIT/IIM legacy we always hear about. If there were more women partners in the VC firms, the likelihood of their understanding and funding women led businesses would be a great deal more, making it easier for the women entrepreneurs. The staggering gender gap, in terms of employment in VC firms, sadly, translates into lesser women receiving funding opportunities today.

A lot will need to change if we want women to get equal opportunities as men for funding and it will have to start with mindsets. The mindsets here need to go beyond the gender equality cliché. We need mentors who understand their working and give them the right support, as at the end of the day we should not forget that this would contribute to the overall growth of the country's economy. In light of this statement, it is imperative that the role of women in business and entrepreneurship is scrutinized with an objective eye; focusing on their actual contributions to various sectors, and also examining the causes behind their innumerable lost opportunities.

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First Published on May 19, 2016 11:18 am
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