We are in exciting times. India has become the third largest startup ecosystem in the world in a decade, just behind US and China. Something significant is happening structurally in our country. It is home to 48 unicorns, valued in excess of 110 B$. In fact, every day this value goes up by about 10 billion when a new unicorn enters the club. However, in all this excitement, I want to talk about the missing middle and the broken growth escalator, as we call it. India has 63 million firms. But only 2% employ more than 10 people. Only 14% of the businesses were run by women in the last decade. But in this decade, excitingly enough, it has become 20%.
The holding pattern of women-owned businesses is a very significant point because this has a lot to do with how women hold shares and stock in their own companies and how they hold assets which are offered as collateral.
Assets like homes or other properties are not in women’s names. These issues impede their access to capital. If we look at the holding pattern of women-owned businesses, we can see that in micro industries, it is 20.44%, 5.26% in small industries and 2.67% in medium industries. Overall, out of all the MSMEs, women own 20.37%.
We see a large number of girls to the tune of 50% studying in colleges. In engineering, girls outnumber boys. So we have women who join the educational stream but somewhere in between, they drop off. What happens to the missing middle? This missing middle is not just applicable to women in the workforce but also in the entrepreneurship space.
We have seen that in SMEs, there is not much of women representation. In large businesses, we can count them at our fingertips. Some of them would be family-owned businesses who have wealth and business handed down through generations. There are very few self-made women that we can look up to.
Seize the opportunity
A phenomenal opportunity awaits us though. We must seize the opportunity and create 30 million new women-owned businesses. We can create more than 150 Mn new jobs, even going by a very conservative estimate.
In 2012, we did a study with GIZ and others regarding the issues which act as barriers for women to become entrepreneurs.
In 2012, we did a study with GIZ and others regarding the issues which act as barriers for women to become entrepreneurs. Women could run lifestyle businesses or micro businesses or they could be gazelles, a word I coined then. A gazelle can run, raise a lot of capital, make a large-scale impact on society and compete with all the others. But why do we see very few gazelles?
The factors that act as barriers and hold women back are:
- Access to markets
- Access to finance
- Access to networks
- Policy action and ecosystem development
- Personal, socio-cultural and aspirational issues
A lot of work has happened in the ecosystem issues, access to markets, finance, networks and policy action. But a deeply personal and socio-cultural issue holds them back, more than aspirational issue. Women tend to feel that they cannot do it or that it would be too difficult. They feel challenged and that the ecosystem is not conducive for them to take on the big challenges. For women, diffidence stems right from childhood. Women are taught to be diffident and deferential to others. These affect the psyche of the individual, but we are beginning to see a change.
We understand that India can add 18% to its GDP if we can bridge the gender equality gap by improving the workforce participation. This is not just by getting them to hold jobs but it is also very closely linked to entrepreneurship, self-employment, creating micro businesses and aspiring to run large businesses.
We understand that India can add 18% to its GDP if we can bridge the gender equality gap by improving the workforce participation.
The importance of ecosystem
Why is the ecosystem development so important? Because it enables collaboration amongst peers, partners and industry players. There is a lot of information asymmetry; but today, because of technology and the digital era, the pandemic has worked as a great leveler where women, because of their access even from home or anywhere, can do as good a job as anybody else.
The ecosystem also offers capacity building programs for scalability and sustainability. We must create role models by recognizing exceptional women change-makers. Madras Management Association is doing a great job, showcasing many fantastic role models who can inspire a generation of young people and convey the message that if they can do it, so can everyone. That aspirational mindset and confidence were lacking when we surveyed more than thousand people, as part of our study with GIZ.
There are certain things that the ecosystem can help women with. We must look within and ask, “Are we being aspirational enough? Are we taking advantage of all that is possible?”
Emerging green shoots
What are the green shoots that are emerging? I mentioned that our study was done in 2012. Niti Aayog has now set up women entrepreneurship platform, which is one of the recommendations of our study. Today, after several years, an entrepreneurship platform has been set up. I am part of a catalyst, which serves as an accelerator for women entrepreneurs. It is a space where people gather together. We set up boot camps, run programs and talk to women entrepreneurs. Aspiring women and women entrepreneurs can become members, start encouraging each other and share their stories so that many other people can be inspired.
Just recently, Makers India in their report said that there has been a substantial increase in women entrepreneurs in Technology since 2010. This is another very encouraging sign. However, total funding raised by women-led tech startups is still very miniscule at 1.43%, between Jan 2018 and 2020. We can see the glaring disparity. With growing aspiration, women-owned startups are increasing. Just having entrepreneurs or an ecosystem alone is not good enough. We need more role model investors and entrepreneurs.
Kalaari and Nyyka lead the way
Kalaari Capital announced recently the launch of a 10-million-dollar fund to invest in women owned businesses. Why is this so significant? Because it is a fund headed by a woman. They have put together a team of all-women for this fund. They understand the issues that women face and are committed to putting out a certain amount of capital for high-growth, women-owned businesses every year. That is a fantastic development.
With growing aspiration, women-owned startups are increasing. Just having entrepreneurs or an ecosystem alone is not good enough.
At the same time, we have India’s first woman-led unicorn Nyyka filing for IPO at a stupendous valuation
of – 4 Bn$. That is unbelievable. It can encourage a whole galaxy of young women entrepreneurs and women to think that they also can do it. Nyyka is being run by Falguni Nayar who was an investment banker and worked in a company like any of us. Eight years ago, she had the courage to start out her business in the field of fashion beauty, which she felt was underserved. Today, they have filed for IPO and it is India’s first woman-owned unicorn at such a stupendous valuation.
This should serve as an encouragement for people to think that they can have a long-standing career. But when they feel that there is a compelling idea, they should just go out and do it. Today, we see women-owned businesses that have raised funding in various sectors, even though the percentage is 1.43%, which is still very small. But they have raised funding from Edtech to consumer brands to biotech and fitness space and beyond. So these are exciting times. We are limited only by our own imagination. I now advise three different biotech companies on scaling up their business. They are phenomenal; their scientists are doing excellent work and I really hope that they are going to succeed as they move to the next level.
Nourish Women’s Contribution
In summary, all that I have to say is what Michelle Obama said: “No country can ever truly flourish if it stifles the potential of its women and deprives itself of the contribution of half its citizens.” I hope all of you feel excited hearing about these success stories.
I am hopeful that India’s women entrepreneurship is ready for a breakout session in the coming years. This decade must belong to women. We have to shed our inhibitions, go out and raise capital. We should not be afraid of doing that.