A vendor enters the office of Jajabor Brand Consultancy, in Delhi, to get a cheque cleared. As Upasna Dash, the company’s founder, steps forward to sign it, the vendor stops her short, saying, “Please get ‘sir’ to sign the cheque.”
“He was shocked when he found out that a young woman like me ran the company and that there was no ‘sir’,” Dash laughs, as she recounts the incident.
Her experience, however, is not much of a surprise in the country’s start-up sector, which is dominated by male co-founders.
Woman-only founders such as Dash, or Neha Bagaria of HerKey, a career engagement platform for women, are still a rarity.
In fact, just 5.9 per cent of start-ups in India — that is, 10,673 in all — are run without a male co-founder or by an all-woman founding team, according to the data analytics platform YNOS Venture Engine. On the other hand, 62 per cent of start-ups do not have a woman co-founder.
And more than 50 per cent of the 700 start-ups that have gone for an initial public offering (IPO) since 2015 have all-male founders; just 21 have no male co-founders.
Angel investor Rohit Jhunjhunwala says the disparity begins with the skewed gender ratio in engineering and management institutes. “A lot of start-ups get created in colleges or during early career days. If the gender parity isn’t great there, that will, in turn, affect the profile of start-up founders,” he says.
The Ministry of Education’s National Institutional Ranking Framework data shows that 80 per cent of India’s top engineering colleges score less than 15 out of 30 in the area of ‘women’s diversity’. The higher the proportion of female students and faculty members, the higher the score. The ideal gender ratio on campus is where women constitute half the student population and 20 per cent of the faculty.
Jhunjhunwala reckons that the actual number of start-ups with all-woman founders is likely to be even lower, given that many ventures, irrespective of the gender of co-founders, become defunct due to reasons ranging from founders’ priorities to market fit, price points and competition. He also points to instances of companies that onboard women co-founders to project themselves as diverse for added access to women-specific accelerators and networking events, among other advantages.
Money talks gender
While venture capitalists may insist that access to funding is gender-agnostic, entrepreneurs like Dash and Bagaria say the reality is vastly different. Dash says a fellow woman entrepreneur was denied funding since she didn’t have a male co-founder as a “de-risking factor”.
Tellingly, there are far fewer women VCs in India compared to their male counterparts. “There are many pre-existing biases in the investment ecosystem even today when a woman tries to raise funds. It also stems from the fact that asset ownership is still quite low among women,” says Preethi Rao, Director of Partnerships and Outreach at LEAD, Krea University. According to a recent report from the Ministry of Statistics and Programme Implementation, only 35 per cent of individual savings accounts in scheduled commercial banks (SCB) are held by women. And when it comes to the cumulative deposit in these accounts, women own just 20 per cent.
Little surprise then that barely one per cent of start-ups without a male co-founder have received angel funding. When it comes to VC funding, the proportion is not much different at 1.3 per cent.
Given the prevailing disparities, Bagaria concedes that her entrepreneurial journey may have been far easier if she had a male co-founder. “There is a study that shows that if there’s a job opening and a woman thinks she’s 80 per cent qualified, she will not apply for it. On the other hand, even if a man is just 60 per cent qualified, he will apply for it. He thinks that he can figure out the rest,” she says, referring to a Hewlett Packard study of gender-specific differences among candidates applying for a promotion. Bagaria believes this diffidence, reinforced by gender-based differences in upbringing, inhibits women from thinking big.
It could also explain why male founders are generally more successful in securing funding compared to female peers, she reasons. “Men tend to pitch with a lot of confidence and project their start-up as a potential unicorn in the next few years. On the other hand, a woman entrepreneur will probably promise what she thinks she can actually deliver. The funder is probably not used to such candour.”
However, a VC, who declined to be identified, says such differences only have a limited impact, that too during seed or angel rounds alone, when founders engage personally with investors. “Most start-ups that reach a particular stage use investment banks to raise capital. The investment bankers usually refine the pitches and, when they reach the VC interaction stage, pitches from men and women are almost in sync,” he says.
Jhunjhunwala, on the other hand, makes a case for women-run start-ups with a ‘realistic’ approach. “Seasoned investors would look at the value-addition that the entrepreneur brings to the company rather than gender,” he says. This, in the long run, would favour women-run start-ups, whose numbers are set to increase in the coming years, he argues.