They are breaking the stereotypes; yet, the entrepreneurial journey for a woman is far more challenging and often needs a catalysing agent.
Ms Maria Peña, Senior Director of Entrepreneurship and Economic Development, VVGP.
Revathi Siddhartha Roy, who runs a cab service for women in Delhi and Mumbai, has driven into a roadblock. The founder of ForShe Ladies Taxi Service wants to expand her 60-cab fleet company but cannot because banks are unwilling to extend finance to train more women drivers.
The Mumbai-based entrepreneur, who launched India's first cab service for women in 2007, claims she has at least 1,500 potential women candidates queuing up to get trained. But they cannot afford the course fee of Rs 10,000, which will equip them with not just driving, but also etiquette, martial arts, and navigation skills — all so essential to steer a cab in the metros.
Ms Roy has been running from pillar to post to get the women microfinance to pay for the training, but the banks feel it is a risky proposition. “The irony is that I have easily got large loans to buy more cars, but it's proving difficult to get this small amount for training, which is so crucial to my business model,” she says. Of course, funds are forthcoming from generous sponsors who believe in her business model. “But, why should I be treated like a corporate's CSR project or a PSU's favourite charity? Why cannot I earn my right to finance on the merit of my idea?” she demands.
Even as dynamic women entrepreneurs like Ms Roy, who incidentally holds a Ph.D in economics, are changing the start-up stereotype with their creative ideas, smart business plans and nifty execution, the gender angle continues to pose an obstacle in both setting up a business as well as scaling-up plans.
More Problems
Says Ms Geetika Dayal, executive director, The Indus Entreprenurs (TiE) Delhi/NCR: “While some of the entrepreneurial challenges are common to both men- and women-led start-ups, it's true that in certain areas women have to struggle more.” Scaling up is a big issue. Other obstacles that women entrepreneurs face were brought home sharply at a recent summit in Delhi organised by women's collective Vital Voices Global Partnership (VVGP). During a panel discussion at the event on “Women as Economic Force in Asia,” Mr Jaspal Bindra, CEO, Asia, Standard Chartered Bank, pointed out that globally 40 per cent of entrepreneurs are women, but in Asia, only 10 per cent of entrepreneurs are women.
Highlighting the difficulties that women in India face, Ms Usha Thorat, RBI Deputy Governor, described how her beautician in Mumbai wanted to open a parlour of her own, but despite being smart and articulate and having a strong clientele found it difficult to convince banks to cough up loans for it.
Stumbling Blocks
According to Ms Thorat, while schemes from the Small Industries Development Bank (SIDBI), to an extent, cover the problem of access to finance that women face, a more inclusive environment is required.
“Access to finance, access to markets, access to networks and mentors are all factors that affect women entrepreneurs,” says Ms Maria Peña, Senior Director of Entrepreneurship and Economic Development, VVGP.
Elaborating, she says that in some countries, especially those where women do not have property rights, the gender component exacerbates the problem. “When traditional forms of collateral like property are not available, it's tougher for women,” she says. Also, unlike the US, where the credit history of every individual is easily accessible it's easier for women to get loans, whereas in countries which don't have this data, it's difficult. Not surprisingly, in the US, a healthy 48 per cent of entrepreneurs are women.
RBI's Ms Thorat feels that creation of credit records in India would be a powerful empowering tool for women entrepreneurs seeking loans. “We need to populate banks with data,” she says.
Fear of failure is another impediment. Quoting a 2007 Global Entrepreneurship Monitor (GEM) Report on Women and Entrepreneurship, Ms Pena says that while both men and women have an equal fear of failure, a higher percentage of females than males would let fear of failure prevent them from starting a business.
Motivating factors
Agreed, there are problems galore. Yet, what are the motivating factors that spur women to start out on their own?
Ms Pena says women's labour force participation boosts entrepreneurship. Again quoting the GEM report, she highlights the importance of work experience in building women's self-confidence as entrepreneurs.
The report says, “The likelihood of being involved in entrepreneurial activity is three to four times higher for those women who also are employed in a wage job (whether full or part time) compared to those who are not working, are retired, or are students.” What this suggests is that working provides access to resources, social capital, and ideas that can help kickstart a venture.
Increasingly, women's networks and NGOs such as FLO (Ficci Ladies Organisation), Vital Voices (which incidentally was started by Ms Hillary Clinton) and TiE's SIGWE (Special Interest Group for Women Entrepreneurs) are playing a big part in catalysing more women to get into business.
As Ms Pena observes, the GEM report which analysed data across 41 countries said that “being employed and having a social network that includes other entrepreneurs are stronger predictors of women's entrepreneurship than educational attainment or household income.”
Surmounting the challenges
So, in what ways do these networks help women surmount challenges?
From matchmaking (finding angel investors), mentoring, organising peer-to-peer dialogues for problem solving, helping with marketing plans to capacity building, generous awards and scholarships, these networks are not only catalysing more women to start businesses, but also helping them achieve success soon. Ms Pena says many women entrepreneurs fail to expand internationally, because of lack of knowledge or access to outside markets. She points to the lovely wall piece she has just picked up from a crafts stall at the summit — such a product would fetch a very good price in the US, but often craftswomen cannot go beyond their own boundaries, she says.
“Networks like ours can create a forum where craftspersons and entrepreneurs can meet buyers from other countries and thereby expand their business,” she says.
Ms Vasvi Bharat Ram, chairperson, Young FLO (YFLO), too describes how the network has organised bazaars where entrepreneurs can showcase their products. She also points to a recent FLO organised trip to Eastern Europe where many members got a chance to meet their peers in the same line of business, opening up new markets.
Also, advocacy and educating the male-dominated banking sector could play a part. As data collated by Vital Voices show, evidence from micro-credit lending is that women have superior repayment rates, invest more productively, and are more risk averse than men in similar situation.
Changing Issues
Ms Bharat Ram also feels that some of the issues have changed now from 25 years ago when FLO was first set up. “At that time, women needed to be motivated to start something, but now in our generation most women are involved in some way or other in business — it may be husband's business, it may be a job,” she says. So even as entrepreneurship building programmes continue, there is also increasing focus on investment training programmes that teach women to invest wisely in stocks and shares, and other skills development workshops like multi-tasking effectively.
A role model also plays a big part. Meeting a successful woman entrepreneur — a Kiran Mazumdar Shaw (Biocon) or an Anita Lal (Good Earth) — and hearing first hand their experiences is a very strong motivator. Creating inspiration through the sharing of success stories is something that most women's networks do.
Finally, while setting up a business is far easier, persisting with it is tougher. Ms Pena says small businesses tend to have a higher failure rate and the average life span is around four years. This is where mentorship, being part of networks that extends support all come in handy.
Helping handIn India, a host of women's networks provide help and support to women entrepreneurship — in many ways akin to incubation centres.
Membership to these networks is very reasonable (TiE membership is for Rs 3,000 annually while YFLO membership (open to women in the 22-40 age group) is for Rs 3,500 a year, with a joining fee of Rs 5,000.
Ms Geetika Dayal of TiE points out how women members of the network not only get access to host of services and the 50-60 programmes that it runs, but many additional programmes too. “At our forum SIGWE (Special Interest Group of Women Entrepreneurs), we put women entrepreneurs in touch with those who have done the journey and can give you advice and guidance on what is required.” While Vital Voices as yet does not have a special programme for India, it is planning to launch in Asia a professional business women's network akin to the one it runs in Middle East and North Africa.
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