We Need More Women Entrepreneurs - Here’s Why

Mar 14

International Women’s Month 2023, centred around “DigitALL: Innovation and technology for gender equality”, spotlights the need for inclusive and transformative technology for all. Women have massive untapped potential to disrupt the digital space by bringing in more creative solutions and innovations through entrepreneurship. The estimated economic growth from women-owned businesses stood at $5T in 2021, according to Masterecard’s Index of Women Entrepreneurs (MIWE) ¹. This value can multiply if we can wipe out barriers like social norms, biases and economic constraints to encourage women to build new ventures.

Which country has the most female entrepreneurs?

To understand where we stand as a global economy promoting female entrepreneurship, looking at each country’s progress in minting women-run companies is vital. Masterecard’s Index of Women Entrepreneurs (MIWE) 2021 ranks a country’s number of female entrepreneurs based on an index calculated as a percentage of total entrepreneurs ¹. The index helps assess how women are fairing compared to their male counterparts as business owners across 65 economies.

The top three economies based on these rankings were the United States, New Zealand, and Canada. The US ranked at the top among its global peers owing to national efforts to create an encouraging environment for female entrepreneurs with access to finance and support to build ventures. Data from the World Economic Forum also suggests that female business owners launched almost half of the startups the US churned out in 2021, a noteworthy sign of progress ².

The few outliers from the developing world that had pushed forward on this front were Botswana, Uganda, Ghana and Malawi, which had exceeded their progress in creating more female entrepreneurs. Women thrive as entrepreneurs in these economies despite the unfavourable socio-economic conditions and lack of funding, proving their resilience and power to adapt. African countries are also a prime example of how entrepreneurship extends beyond our typical view, as the continent is teeming with women-run informal micro and small enterprise (MSE). These small businesses have significant potential to boost the economy further if the public sector supports them through formalisation.

These advancements must not be looked at in complete isolation to paint a picture of success in achieving gender parity in the business world. The fact of the matter remains that women own only 1 in 3 businesses globally, according to World Bank data, and women still need better social and economic conditions to excel as entrepreneurs ³.

Problems faced by women entrepreneurs

Society needs to acknowledge that men and women have different obstacles to face while trying to reach the same level of entrepreneurial success. Let’s dive into some challenges women entrepreneurs face to better understand how we can support them.

Lack of VC Funding

One of the critical components to building a business is ‘access to finance’, and women today are still struggling to access it. The numbers say that venture capital is a man’s game, with less than 3% of women-founded startups receiving venture capital funding, as highlighted by the Havard Business Review ⁴.

Lopsided Social Norms

Constrained by societal pressures, women refrain from making big swings as business owners. In the developing world, rigid gender norms are making it very difficult for women to sustain growth as an entrepreneur. In Vietnam, 80% of men and 60% of women believed that women must be the primary childcare provider despite the challenges of building and running a company as revealed in CARE’s Ignite program’s research ⁵.

No Mentorship

Women are already playing a challenging game by taking the leap to launch a business, and a lack of support from advisors to navigate this journey only makes it more complicated. Nearly 50% of female founders say that a lack of such mentorship restricts their professional growth, as cited in Forbes’ online publication ⁶.

3 reasons why women make great founders

1. Women build better company culture

Women have a knack for building a positive work environment and culture. During their research, the Journal of Organizational Behavior found that women-led teams tend to be much more collaborative, have better communication and are hungry to learn, whether in a remote work environment or a physical one ⁷.

2. Women are resilient

In the face of the recent health crisis, women have proved to be resilient business builders and exceptional leaders. Women surpassed men in 10 economies in terms of entrepreneurial activity in 2021 (MIWE 2021), a testament to the fact that women are better at crisis management, adaptability and leading a business during tough times ¹.

3. Women-led businesses generate more revenue

Businesses tend to thrive under female leadership, generating returns that more than double each dollar invested, as stated in BCG and MassChallenge’s research ⁸. This data also corroborates the findings of researchers who found that female-run Fortune 1000 companies, when compared to the S&P 500 companies between 2002 and 2014, generated returns that were 226% higher ⁹.

How can we create better opportunities for female founders?

Empowering women entrepreneurs is challenging and requires a joint effort from the public and private sectors alike. Here are some ways to help:

Garnering public and private sector support to create better incentives to encourage institutions to invest in female-led startups through VCs, private equity, and social capital would help take a big step forward.
Getting more women interested in being a part of investment teams by scouting for the right talent, mentoring them, and helping them grow into leadership positions can help women entrepreneurs seeking funding to finally have someone on the other side of the table who understands them.
Governments can also refine and modernise their grant and loan programmes to give women equal opportunities while competing for funding.
Mentorship support through accelerators, skill-building training, and innovation programmes can help women enter the world of entrepreneurship.

The imbalance between the ideal equitable entrepreneurial environment and the one we have today is real and more extensive than expected. Women are still blazing through these unjustified restraints and making their mark in the startup space, but imagine what they could do with the proper support and policies. Women have a solid case to encourage more support to nurture them as entrepreneurs owing to their innate abilities to generate economic value through leadership, management and decision-making.

We at Futurize, too, believe in encouraging more women to become entrepreneurs by building innovation programmes in Science and Technology that ensure a 50:50 gender split. These programmes help women build the skills they need to launch ventures, innovate and pioneer ideas in the digital world. You can learn more about our success stories and how you can facilitate this journey at www.futurize.studio.

References:

Urvi Bhatia