Venture capitalists not ready to take chance on women entrepreneurs: Smriti Irani
The growth of women-led businesses in India is being hindered by venture capitalists who are apprehensive about backing female entrepreneurs, says Smriti Irani, Minister of Women & Development and Minority Affairs, Government of India.
According to Irani, these investors are more willing to take risks and accept failures when it comes to men in similar positions.
“The bottleneck is those people who sit as VCs in financial institutions who don’t want to take the chance with women failing and are okay with men failing, even when the ratio of men failing is higher,” Irani said at the Mumbai Tech Week on February 18.
Recent reports suggest that only 18 percent of approximately 30,000 active digital startups in India have female founders or co-founders.
Irani stressed that the issue lies with VCs who are not funding women in technology and leadership positions, as well as startups that only use female faces for appearance but do not give them financial control of the company.
Contrary to common perception, the lack of venture capital-led funding is the main obstacle faced by women-led businesses in technology, according to the union minister.
“Talent, resilience, innovation and ideas are not the bottlenecks,” she added.
Additionally, Irani made a case for women founders’ managerial instincts and their ability to maintain financial discipline in their ventures.
Analyst comment
Negative news: Venture capitalists in India are reluctant to back women entrepreneurs, hindering the growth of women-led businesses. Only 18% of digital startups have female founders. However, the Minister believes that talent, resilience, and innovation are not the issue. Women founders could bring managerial instincts and financial discipline to their ventures. Market impact: The lack of venture capital funding for women-led businesses may slow down their growth and limit their potential contributions to the market.
