Mumbai, India – Last June, in an unconventional move, Ragini Das tweeted a request to women angel investors to join the circle for equity financing of her young startup.
In October, leap.club, a women’s-focused professional network that Das co-founded two years ago, raised just under $ 1 million in a circle led by Enzia Ventures, a women-led venture capital company, including investments from 13 startups. .
She is now raising the first major round of institutional funding for the startup, which is proving much more difficult, but she has no plans to give up.
“I’m in a room full of men for the leap.club, which is mainly for women… Finding someone who fits our bill… it’s getting harder,” said Das, who left food delivery company Zomato. to create a Delhi-based leap.club with a former colleague man.
Das says she has faced “absurd” scenarios. A future investor, she recalls, once asked her co-founder husband about her long-term plans, asking him, “Will she get married and leave, or is she here to stay?”
Investors also often overlook her presence when talking about numbers. “I am the one who discusses business [at pitch sessions], it seems [only] it won’t help my co-founder, “she said.
Das is not the only female founder to have experienced such a thing. This is the bias that women in India face when trying to raise private capital.
The bias, says Aditi Srivastava, co-founder and CEO of the Mumbai-based digital media startup Pocket Aces, may also seem finer.
“Investors are definitely aware of the involvement of more women founders – but then why aren’t most women founders actually receiving funding?” two men.
“Inherent biases come into play.”
Business case for gender equality
There is a sharp imbalance in the funds raised by women founders, including those with hybrid founding teams, and this is a global problem.
In the United States, the world’s largest venture capital market, women’s founders alone have raised just 2 percent of the $ 330 billion invested by venture capitalists in 2021, the lowest level since 2016, according to PitchBook. Hybrid teams performed better by 15.6 percent. India-specific data are not yet available.
This is despite the fact that worldwide gender equality has been declared a mandate in most venture capital firms (VCs) and private equity firms (PEs) for some time, but this has not led to more women in investment roles.
In 2020, women make up 16 percent of India’s PE and VC teams, close to the Asia-Pacific average of 19 percent, according to a June 2021 IVCA-Bain & Co report. But at the highest levels, women were only 5 percent from the teams.
Apart from the mandates, there is a business rationale for gender equality.
According to a research report for 2019 (PDF), based on data from more than 700 PE and VC funds and 500 portfolio companies, the International Finance Corporation (IFC) noted: annual return. “
He also found that companies in a portfolio with gender-balanced leadership teams also had better ratings and saw a 64 percent increase in the score between two rounds of funding or liquidity events, about 10 percentage points higher than companies with gender imbalance.
The report, the earliest advocating for a gender balance in private equity, says more women on investment teams are leading to better investment decisions. Male investment professionals, it is noted, tend to ignore or underestimate businesses that serve primarily female consumers, who actually manage 70 to 80 percent of all consumer purchases in homes.
India has role models, such as online beauty retailer Nykaa, says Ragini Bajaj Chaudhari, who manages investments at Caspian Debt, the microcredit division of investment firm Caspian. Founded by former investment banker Falguni Nayar, Nykaa made a hugely successful debut in the public market last year, with a market capitalization of $ 13 billion hours after the shares began trading. Chaudhary believes there are others with this potential and her company is actively looking for women founders to fund it. In 2020, 46% of the loans granted by her company were to women. In 2021, this number is slightly higher.
Step by Step
Women like Das and Srivastava break the status quo.
At Pocket Aces, nearly 40 percent of the 200-member team and more than 30 percent of its leadership are women. This has affected the content it provides, and its original short and long web series have covered topics such as women entrepreneurs.
“Every part of our content is built on this progressive thinking, whether it’s empowering women or normalizing divorce … today we reach 50 million people a week,” Srivastava said.
He works for the startup, which he says expects to earn at least 1 billion Indian rupees ($ 13.4 million) in revenue for the current fiscal year ending March.
Das wants women to have a platform to network and find potential customers for the best jobs – through leap.club.
“The professional network, especially for women, is broken,” Das said, as women are often locked up by the Old Boys Club. Members pay an annual subscription fee of Rs 5,000 ($ 67.2) for benefits such as micro-communities based on professional or personal interests and access to CEO coaching at affordable prices. The network has more than 3,000 members and aims to reach 10,000 this year.
“When we started, [investors] He told us: “Women do not invest in their professional growth. Why are you chasing this? ”Says Das.
This partly prompted her tweet last June. “We needed more women at our hat table,” she said.
In Bengaluru, Hardika Shah, who left her 20-year career consulting with Accenture in the United States to start fintech company Kinara Capital in 2011, decided from the outset to take on a predominantly female management team.
“Opportunities must first be created to enable systemic change … we have demonstrated both social impact and sustainable growth and profitability,” she told Al Jazeera by email. Kinara has so far paid more than $ 320 million to small businesses in industries such as manufacturing, trade and services, many of which are owned by women.
Eradication of “unconscious bias”
Nupur Garg, a former IFC regional leader for South Asia, has taken a more macro approach to tackling the problem. Her two-year nonprofit, based in Delhi, Women in PE, or WinPE, has persuaded more than two dozen PE and VC companies to work to address the imbalance. Mandates for recruitment agencies, she says, now envision 30-40 per cent of diverse candidates.
WinPE, whose advisory board includes private investors such as Anita George and Renuka Ramnat, has 25 member firms, including some of the largest in the industry. These companies, Garg says, have adopted blind screening to “eradicate unconscious biases” and have begun to use indicators to measure gender diversity. “Measuring is really the first step towards understanding what’s going on,” she said.
Twenty-five companies may look small in an industry with more than 700 active players, but Garg believes that these “industry-leading companies” will “create a huge boost for the entire industry to move forward.”
More investment companies like Enzia Ventures run by women would also make a difference. Four of the eight companies he has supported through his angelic union and foundation have female founders or CEOs. “This is the result of an impartial lens that we contribute to the assessment of entrepreneurs,” said Namita Dalmia, co-founder of Enzia with Karuna Jane and Jaishri Kanter Patodi in 2019. The company is currently raising an initial fund of $ 40 million.
Are there really no qualified women?
However, fund managers say the problem is a lack of talent. “We [once] “We kept the position open for six months because we couldn’t find the right candidate,” said a Mumbai-based fund manager of a US-based private investment company, who requested anonymity because he was not authorized to speak to the media.
Despite the diversity mandate, especially in global PE companies, “10 percent of our applicants, at all levels, are women,” said a recruitment consultant at a Mumbai-based recruitment firm that declined to be named. due to customer privacy.
Garg from WinPE says that what is missing is outreach, not candidates.
At WinPE’s first meeting with member companies, she recalls, talent shortages were identified as a key challenge. So the team turned to investment banks, consulting firms and university campuses. Within six months, more than 1,000 women responded, 85 percent of whom wanted to join private capital but did not know how. “So there’s a supply,” she says.
Fund managers also often say that the inadequate recruitment of bank entrepreneurs is one of the reasons why more women founders are not funded. Fund managers at leading VC and PE companies who were contacted for comment declined to participate in the story.
Recently, some of these companies have made efforts to attract more women founders in the womb, but they still do not mean a serious intention. Sequoia Capital, for example, launched the Spark Fellowship in July last year for women entrepreneurs in India and Southeast Asia. The scholarship, according to Sequoia’s website, offers a $ 100,000 grant for 15 entrepreneurs and mentoring for 12 months.
“But why a grant?” Why not just fund them? “Chaudhari asks Caspian. This, in short, underscores the very long road that women have to pursue in the pursuit of gender equality as founders.
Sequoia did not respond to email inquiries.