Although there has been a substantial increase in the number of women entrepreneurs in the technology sector since 2010, the total funding raised by women-led tech startups is almost negligible, according to a recent study by MAKERS India. However, the study has found, the Coronavirus-related lockdown period has shown that women entrepreneurs are not far behind their male counterparts when it comes to leading their startups through tough times.
MAKERS India launched its first-ever report, State of Women in Tech Entrepreneurship in India, at TechSparks 2020 – the annual flagship event of YourStory Media. The report provides insights into the state of women in tech, after rigorous analysis of data from the period January 2018 to June 2020. The report highlights the challenges faced by women entrepreneurs, and the need for more action, especially when it comes to investing in women tech entrepreneurs. Read and download the report from here.
The following are the key takeaways from the report.
Investment Diversity Gap in the Indian startup ecosystem
Women-founded and co-founded startups account for less than 6% of total investments infused into the Indian startup ecosystem, reveals the report. The funding raised by Indian startups with at least one woman founder accounted for just 5.77% or $1.69 billion (across 378 deals) of the total startup investments in India for January 2018 to June 2020.
One of the biggest reasons, suggests the report, is the scepticism about women entrepreneurs in the tech ecosystem. Of the 2,460 investors who participated in startup funding during the Jan 2018-June 2020 period, only 22% (540) invested in startups led by at least one woman founder.
While women entrepreneurs in tech receive support and visibility at an early stage, support for growth and scaling is dependent on market sentiment and volatility. The numbers speak for themselves: In H1 2020, the early-stage funding deals for startups led by at least one woman founder increased by 8.16%, while growth-stage deals reduced by 54%.
Impact of Covid-19 pandemic on women tech entrepreneurs
In times of the Coronavirus pandemic, several women-led startups scaled down their operations to stay afloat. Several women also turned to home chefs and started a business, while some in the apparel industry adapted to the situation, and instead began to manufacture protective face masks and PPE kits.
But in the first half of 2020, funding for women-founded and co-founded startups fell by 24% to $280 million, compared to $369 million in the first half of 2019. –In fact, the funding has declined across all three stages – early, growth, and late — in H1 2020, compared to H1 2019.
Notably, edtech segment received the highest quantum of funding - at $94.3 million over eight deals, followed by fintech at $42.9 million in eight deals.
Rise in the number of women-led startups
There are approximately 297 women tech entrepreneurs running 285 tech startups in India now – a major rise from just 26 startups in 2010. Yet, women-only-founded startups account for just 22.5% of the total 285 startups that have at least one woman founder.
In a sector-wise analysis, women tech entrepreneurs were found to have the highest presence in the fintech and financial services sector, with at least 26% of women-led startups in this space. Next comes e-commerce, which has found favour among women tech founders with 20%, followed by edtech at 18%, and healthtech at 16%.
Investors sceptical about investing in women tech entrepreneurs
Of the 2,460 investors who participated in the startup funding activity in India from January 2018 to June 2020, only 22% (or 540 investors) invested in startups led by at least one woman founder. When it comes to the total number of disclosed funding deals in women-founded startups, Omidyar Network is the leader with at least 15 deals in women-founded or co-founded startups, followed by Sequoia Capital with at least 12, and SAIF Partners with at least nine, between January 2018 and June 2020.
Steps to boost the women in tech entrepreneurship in India
The report suggests that it is important for women to have the right allies that steer their growth as entrepreneurs. Besides, there is also a need for greater access to capital and undeterred confidence in their own abilities to tackle challenges and move ahead in their journeys. It is also important to increase the ratio of women in leadership roles. The more the women leaders in the startup ecosystem, the more it will encourage other women to follow their footsteps. The report also observed that more experienced women need to start mentoring other women entrepreneurs, especially at the early stage.
Last but not the least, there should be more emphasis on open platforms for fundraising, such as Shark Tank, that can promote transparency and reduce chances of gender bias in the ecosystem.
(Edited by Athira Nair)