Supporting Women-Owned Businesses Through Investment: Guide Towards Making An Impact

Over the past few decades, there has been a significant increase in the number of women-owned businesses. According to a study by the National Sample Survey Organisation (NSSO), around 14% of all business establishments in the country are owned and run by female entrepreneurs. It accounts for approx. 8.05 million worth of businesses managed by women, employing over 13.48 million people.

Despite this growth, it is strange to see that as many as 79% of enterprises run by women are self-financed; only 4.4% have borrowed money from a financial institution or received assistance from the government.

The International Finance Corporation found that companies with gender-balanced leadership teams had valuation increases up to 25% higher than those with non-diverse teams. To capitalise on the opportunity, a new strategy of investing has been introduced which is popularly known as Gender-lens investing.

Gender-lens or gender-smart investing refers to investments that achieve a greater social and financial return on investment by focusing on businesses owned or led by women, have good gender balance, and/or serve women customers with their products and services.

Given that this is an evolving concept and 61% of the funds are first-time funds, it can still be difficult to lay your hands on these funds. In this blog, we'll explore what are the other ways to invest in female entrepreneurs and support women-owned businesses

1) Support women-led venture capital firms/funds.

There are a growing number of venture capital firms that focus on investing in women-owned businesses. Supporting these firms can help to increase the number of investment opportunities available to women entrepreneurs. Some of the leading VC funds helping women entrepreneurs in India include - Kalaari Capital, Saha Fund, She Capital, StrongHer Ventures etc.

2) Consider crowdfunding

In India, there are several crowdfunding platforms such as Ketto, Milaap, and Wishberry that can be used to support women-owned businesses. These platforms provide a way for individuals to invest small amounts of money to support new and innovative products and services. By crowdfunding, investors can help women entrepreneurs achieve their funding goals and bring their ideas to life. It's an excellent opportunity to support women-owned businesses in India and help them grow.

3) Look for networking opportunities

Joining groups or organizations that are dedicated to supporting women-owned businesses can be a great way to meet and network with female entrepreneurs. Organizations like Sheros and Indian Women Network (IWN) provide platforms for women entrepreneurs to connect with each other and with potential investors. By joining such groups or attending their events, investors can network with female entrepreneurs and identify investment opportunities that align with their interests and goals.

4) Advocate gender- diversity in the workplace

To accurately evaluate businesses that meet needs specific to women, it's important to strengthen gender diversity within investment teams. Male investors may not fully grasp the potential of a product or service aimed at women, but having women on the team can help reduce bias and make accurate assessments. For example, Niramai, a health tech start-up in India, developed a non-invasive breast screening method that addresses key factors for women in smaller towns and rural areas.

Studies show that when male analysts come across such propositions, they often seek feedback from the women in their lives, such as their wives or sisters, to form value judgments. By having women on investment teams, bias can be minimized, and accurate assessments of potential women-owned businesses can be made. Thus, strengthening gender diversity within investment teams is necessary for evaluating and supporting women-led startups.

5) Don’t overlook small businesses

While it can be tempting to focus on large-scale investments, small businesses can also be a great investment opportunity. Many women-owned businesses start small and grow over time as they are mostly bootstrapped/self-funded and investing in these businesses can be a great way to support female entrepreneurs as they work to build their companies.

6) Invest in Women-Led companies, it isn’t mere equality but it's good for your portfolio too

Investing in women-led companies is a smart financial decision, as these companies have strong leadership, promote innovation, and have better financial performance. Women make up a significant portion of the consumer market, making companies that cater to their needs more likely to succeed. One of the many such inspiring examples includes - Dipali Goenka - Under her leadership, Welspun India has emerged as a global leader in home-textile retailing. It achieved 39% YoY growth in domestic consumer business during 9M FY23, with revenue of INR 4,276 million.

Conclusion

In conclusion, supporting women-owned businesses through investment is crucial for promoting gender equality and economic growth. By doing your research, attending networking events, considering crowdfunding, investing in diversity-focused funds, and mentoring women entrepreneurs, you can help support and empower female entrepreneurs. With more investment and support, we can continue to foster a more inclusive and diverse business landscape.