Aditi Bhutia Madan, an Indian entrepreneur, recounts her upbringing in Darjeeling as being filled with pine trees, Himalayan sunrises, and her grandmother’s momos, the savoury dumplings that subsequently served as the impetus for her to found her own firm.
Madan, a past participant on MasterChef India, was confident in her culinary abilities but had difficulty finding formal financing to expand her Yangkiez By MomoMami business in India.
Madan endured years of dealing with loan sharks who demanded outrageous interest rates or a part in her company.
Madan, who is in her mid-40s, joined thousands of other female entrepreneurs in the Women StartUp Programme (WSP) at NSRCEL, a business incubator at the Indian Institute of Management Bangalore, which trains participants in business skills such as the art of pitching for funding. This led to a change in her situation.
She raised 7.5 million Indian rupees ($91,000) from investors for infrastructure development at her company’s production plants after making her first presentation on the reality series Shark Tank India.
I had no prior pitching experience before attending WSP, she claims.
On the MasterCard Index of Women Entrepreneurs, which measures the advancement of women in business internationally, India is ranked 57 out of 65, and only one in five of the nation’s firms are run by women, according to government statistics.
One major obstacle is unequal access to capital. Women entrepreneurs are more likely to be turned down by investors when they do approach them for funding.
According to the International Finance Corporation (IFC), the private sector division of the World Bank, female entrepreneurs only received 5.2% of the outstanding credit offered to businesses by Indian public sector banks, leaving women-owned businesses with a credit gap of about $11.4 billion.
Many small businesses in India rely on family support or self-financing, both of which are more challenging for female business owners. According to a poll conducted by Bain & Company and Google, 43% of women reported their spouses and family did not support their enterprises.
According to Sucharita Eashwar, the nonprofit organisation Catalyst for Women Entrepreneurship’s creator based in Bengaluru, this is the first obstacle that many women encounter. Their family are unwilling to provide them with financial support.
Discrimination based on gender
In the 1.3 billion-person nation, rampant gender discrimination and enduringly male-dominated views of women’s roles are to blame for a large portion of the funding difference.
Preksha Kaparwan, 33, self-taught herself design, coding, and website development. She later co-founded two firms for artificial intelligence data analytics, AlphaaAI in Delhi in 2019 and Super AI in San Francisco in 2022.
She claimed that even then, during pitch sessions, investors viewed her differently from her male peers. Some asked her no questions at all, while others began to discuss the weather.
Investors must be unbiased towards the gender of the person in front of them, she said.
Before deciding to finance a woman, potential investors are more likely to take her age and marital status into account, according to Jibin Mathew, assistant manager at the WSP.
“They speculate that she might get married in another two years, which they worry could harm their investment. There are also concerns for her family if she is married,” Mathew added.
“These questions are never posed to male entrepreneurs.”
Men are more likely to receive positive responses – and more investment – when investors ask them “promotion” questions about their goals and accomplishments, according to American research.
A 2018 study indicated that “the entrepreneur’s ability to raise capital” is hampered since women are more frequently asked “prevention” questions about safety, losses, and potential hazards.
Funding imbalance
Women-led enterprises in India received just 0.3% of venture capital financing in 2021.
Entrepreneur-turned-investor Anisha Singh established the She Capital fund to support female business owners five years ago in an effort to remedy the mismatch.
She stated that she did not anticipate that “making a case for females, and female founders would be so tough” as she listed the accomplishments of her fund.
According to studies, companies formed and co-founded by women produce more revenue and add more jobs.
Despite this, Nidhi Gupta, executive director of Dhriiti, a nonprofit organisation dealing with entrepreneurs in Delhi, claims that banks are also reluctant to support female entrepreneurs and worry about their success.
When applying for a loan, bank employees have occasionally requested that women in her programmes provide the signature of a male relative.
According to a 2022 survey by charity Bharatiya Yuva Shakti Trust (BYST), an organisation mentoring entrepreneurs from poor communities, over 85% of women entrepreneurs encountered difficulties in obtaining credit services from public sector banks.
A survey by the nonprofit Initiative for What Works to Advance Women and Girls in the Economy (IWAAGE) found that even though the Indian government offers financial support programmes for female-led businesses, only 3.4% of all female entrepreneurs have profited from them.
Female business owners may experience “a lonely journey” when faced with such practical issues, according to Pegu, who also said that courses like the WSP may offer a women-focused feeling of community to counteract the male-dominated business environment.
Lack of access to professional networks and groups causes gaps in market and funding knowledge, according to experts.
Women must also be given the right training, such as instruction in the art of making a persuasive case to investors, Singh said.
She said, “I know you are an expert in your field. Why do you give that to someone else to talk about, then? $1 is equal to 82.0130 Indian rupees.