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Business Other News 18 Jun 2018 Women-owned start-up ...

Women-owned start-ups generate more revenues

Published Jun 18, 2018, 12:46 am IST
Updated Jun 18, 2018, 12:47 am IST
Women entrepreneurs receive less money than men to start ventures.
Venture capitalists could have made an additional $85 million over five years if they had just invested equally in both female- and male-founded  start-ups.
 Venture capitalists could have made an additional $85 million over five years if they had just invested equally in both female- and male-founded start-ups.

Hyderabad: Women-owned start-ups generate better revenue and are more promising, but to get investors in the first place is difficult. While funding is a major problem for start-ups, if the founder is a woman, it is even more challenging.

According to a study by the Boston Consulting Group and MassChallenge, when women entrepreneurs seek capital from investors to start their ventures, they receive considerably less funding than men — the disparity can, on  average, be more than $1 million.Yet, women-founded businesses deliver higher revenue – twice as much per dollar invested.


Ms Vaishali Neotia, CEO of Merxius, a Hyderabad-based start-up, said, "Studies have time and again shown that if women are mentored or coached they will always pass it on. It is a cyclic effect. If you see more women as investors, you would see more number of women start-ups getting money. So the need of the hour is to have more women founders and investors."

Women founders concur that there is a bias especially when they are pitching the idea in the early stage, even though investors may not be aware of it. Having a woman on board not only adds diversity and has better chances of customer retention.

"In terms of revenue, women are lot more patient and persevering when it comes to getting a task done or looking at the goals of the company including and not limited to top line and revenue. I've heard VC's resonate that if there is a woman in the founding team, it makes sense when it comes to target, revenues, APIs and customer retention," said Monika Mishra, founder of Ikeva.

"Women are more successful because once they get funding, there is no stopping them. If more women come forward, then there are more chances of investments coming in," said Ms Deepthi Ravula, CEO of We-hub, which works with banks and corporates and makes the most of the policies provided by the government to get funding for women entrepreneurs in Telangana state.

If a business is female-oriented, women entrepreneurs can get funding relatively easily because venture capitalists know they will be good at it. But if it is purely a technology start-up it is another ball game altogether.

"Often heavy funding goes to tech companies, but it is difficult for tech companies with women to secure funding. When writing a programme, technology doesn't create bias, so there is no need for investors to be biased against woman techpreneurs," Ms Neotia added.

Female entrepreneurs receive a tiny fraction of all venture capital funding — a minuscule 2.2 per cent last year. Yet women-run companies are returning 78 cents per dollar compared to 31 cents for the men. Venture capitalists could have made an additional $85 million over five years if they'd just invested equally in both the female- and male-founded start-ups.

Start-ups hesitant to hire women

In the start-up ecosystem which does not have deep pockets, entrepreneurs are hesitant to hire women. Are you getting married soon, are you planning a family soon, are questions women candidates are inevitably asked, as employers weigh maternity and other benefits they may have to extend.

"Start-ups cannot afford to pay salary (when the women are away) and they work on tight deadlines," said a male entrepreneur who preferred anonymity.

Start-ups need people to work long hours and with greater intensity, at least till they become profitable and sustainable and the assumption is that women will not be able to cope up with this. Mandatory maternity leave is another thorn for  employers, particularly with early stage start-ups.

Women entrepreneurs don't buy these arguments. "Start-ups as such are dynamic and there are no contracts. The employees tend to move out whenever they get better opportunities. So holding off a potential woman employee just because of marriage or pregnancy is not good for a start-up. Many entrepreneurs are highly educated and the last thing on their mind should be gender," said Ms Vaishali Neotia, CEO of Merxius.

Women may not be applying in large numbers to start-ups because of the long working hours. This is changing slowly due to initiatives like We-Hub.

"We-Hub is creating a women and children friendly environment and wants women to come back to work. We are setting up a child-play area, child friendly bathrooms, and rest areas to ensure women employees and entrepreneurs have a conducive environment to work in. We are creating open-collaboration area where any woman entrepreneur can reserve time and hold meetings in a safe environment," said We-Hub CEO Deepthi Ravula.

Location: India, Telangana, Hyderabad