Women entrepreneurs: The obstacles, the opportunities and how fintechs are empowering them

Even though social indicators have improved, economic inclusion and the advancement of women are not directly correlated with India’s growth. According to the sixth economic census, women make up just 20.37% of India’s 64 million entrepreneurs. Only five of India’s Fortune 100 companies are currently run by female CEOs, and only 15% of startups that have become unicorns were founded by women. Even though only one fifth of businesses are run by women, they have a big impact on job growth and economic growth in general. McKinsey Global states that increased female labour force participation has the potential to boost India’s GDP by 700 billion US dollars.

Gender discrimination and societal pressures

According to the World Bank, 35% of Indian women of working age currently do not have paid employment. Only 35% of Indian women actively use their bank accounts, and only 59% of women have access to mobile phones, which further restricts their opportunities. In addition, only 19% of Indian women have internet access. More importantly, there are fundamental differences in the limitations that male and female entrepreneurs must overcome, including psychological and cultural factors. Financial support is frequently inaccessible to female business owners, which eventually has an impact on business growth. Women in India can be constrained by a variety of mindsets, including risk aversion, soft skills, and leadership. They also face cultural restrictions that hinder their independence, aspirations, and priorities. The success of female business owners depends on their personal lives, their ability to run successful businesses, and how supportive their stakeholders are of them.

Why do female entrepreneurs have an upper hand? 

Indian women are self-reliant and highly motivated to launch their businesses. According to Boston Consulting Group, over five years, start-ups that were founded or co-founded by women bring in 10% more overall revenue. These start-ups have a more welcoming work environment and hire three times as many women as men. In addition, it is predicted that women-owned businesses will expand by 90% over the coming five years.

Women-owned businesses generate significant revenue, more jobs, and business expansion. Women-led start-ups return 78 cents on every dollar invested compared to men-led start-ups’ 31 cents. According to a KPMG survey, women entrepreneurs are also known to take more risks. More women than men (43%) are willing to take risks. Additionally, it has been discovered that women are more adept than men at seeing opportunities.

Greater financial inclusion for female entrepreneurs 

In India, fintech firms play a significant part in encouraging women’s entrepreneurship at both the micro and macro levels. Numerous studies have suggested that as the use of mobile apps, wallets, and platforms has increased, so has the overall trend of savings and investments among Indian women. 

Women today are running successful business operations like kirana (grocery) stores with the help of voice-based apps and banking-plus solutions like savings and health insurance. By making small and microfinance more accessible, making credit more widely available, and providing quick answers to their financial needs and questions, fintech companies are in a way encouraging micro-entrepreneurship. The total amount of time needed to obtain such services has significantly decreased, and thanks to UIDAI (Unique Identification Authority of India)-supported platforms, women entrepreneurs can use mobile banking solutions when combined with microfinance institutions. Online marketplaces and peer-to-peer lending platforms that provide customised, small loans have been developed by numerous fintech companies. These quickly expanding channels are perfect for women business owners because they cater primarily to MSMEs without extensive credit histories or collateral and manage risks through volume and diversification.

Call to action 

Going forward, government and fintech players must collaborate to realise the goal of making India a gender-inclusive global fintech leader to ensure that women-led businesses can take advantage of the opportunity offered by fintech lending platforms. 

Indian fintech companies should make more effort to understand the financial benefits of supporting female entrepreneurs. We at Tide can suggest a range of strategies, such as:

• Providing special incentives and programmes including low-interest group loans, to female business owners. 
• Alternative methods of risk assessment for locating proxy information and indicators to evaluate the creditworthiness of female entrepreneurs. 
• Supplying assistance with credit applications so that female business owners can learn how to strengthen their loan applications 
• Gather gender-disaggregated data and fully comprehend the needs of each gender to develop products specifically for female entrepreneurs. 
• Creating loan products that are specific to a sector instead of just providing SME loans as a general category
• Creating targeted products for industries where there are more women-owned businesses 
• Create awareness and help women business owners utilise Govt. issued SME schemes to the fullest
• Form cluster-based networking groups 
• Constant mentorship sessions, not just in Tier 1 or 2 cities, but the smaller pockets as well to identify and then help grow the entrepreneurship quotient among women

Furthermore, the sector should collaborate closely with the government to reduce barriers to job creation, close gender gaps in secondary and tertiary education and expand skills training in important industries. The industry should also help in stepping up gender diversity policies in the private sector, strengthen legal protections for women and the enforcement of laws, and reshape deeply ingrained attitudes about the role of women in the workplace and society.

Notable milestones for Tide India’s Women in Business initiative

March 2022

Tide (India) made a bold commitment to support 500,000 female-led businesses, start out by the end of 2027. We also plan to work as an incubator for women business owners in India. The Women in Business initiative is aimed at digitally transforming businesses beyond Tier 2 and Tier 3 regions in India.

The core focus areas of this initiative includes counselling and educating women small business owners on Regulation and Compliance, Accounting and Financial Planning, Filing Tax Returns, Loan Application Support, Marketing and Sales, in addition to facilitating Peer Training and Networking. Additionally, women entrepreneurs in Telangana can also use a free co-working office space on Tide premises, when starting out.

August 2022

In a move to empower women-led small businesses in India, WE Hub (Telangana’s state-led incubator for women entrepreneurs) and Tide entered into a Memorandum of Understanding (MoU). This partnership is set to elevate Tide’s India Chapter of ‘Women in Business’ and enable aspiring women entrepreneurs across India to both start and grow their businesses and overcome administrative challenges. With this partnership, women entrepreneurs not just in Telangana, but pan-India will have access to Tide’s comprehensive financial admin and advisory services, facilitating their inclusion in the formal economy – ensuring timely and adequate access to financial services.

Tide and WE Hub aim to create an ecosystem to help women entrepreneurs have greater access to business and technical support, as well as mentoring, with increased opportunities for growth.

Feb 2023

We conducted our first mentorship session in Hyderabad at the WE Hub office. This was a live session that decoded the Union Budget 2023-24 for women entrepreneurs and highlighted the provisions that can help them better manage their business. We discussed the complexities of the taxation system and advised how women entrepreneurs could save time and money.

March 2023:

Tide and WE Hub together, have launched the ‘Sarthika’ programme, to bridge last mile delivery gaps in state and central government schemes for women-led micro, small and medium-sized enterprises (MSMEs).

Through this initiative, we aim to reach women entrepreneurs across India and enhance the ease of doing business by improving access to information and uptake of public schemes and initiatives. 

The Sarthika web portal will work with the cohort at the grassroots level to navigate through the application process, eligibility criteria, and other important aspects of the schemes. After full KYC, Tide India and WE Hub will work with relevant government departments to quicken operationalisation of the schemes.