Women tend to have better communication skills, allowing better employee and stakeholder alignment with the business vision.
A growing body of research suggests that women-led organisations perform better. A study by the Peterson Institute for International Economics found that firms with at least 30% of women in leadership positions had net profit margins up to 6 percentage points higher than companies with no women in top management roles. Another report by BCG and MassChallenge found that startups founded or co-founded by women achieved 10% higher revenue over five years compared to their male counterparts.
Researchers have demonstrated that women leaders embrace the diversity of thought and perspectives, which fosters innovation and creative solutions. Besides, in contrast to their male counterparts, women also value collaboration and teamwork, thereby helping anchor a more supportive and inclusive work environment. Furthermore, women tend to have better communication skills, allowing better employee and stakeholder alignment with the business vision. And it needs no reiteration that women are better risk managers, leading to cautious decision-making and better risk management.
These specific traits have broadly led to women-led organisations achieving higher profitability than their male counterparts. For example, a study by American Express found that women-owned businesses grew their revenue by 58% from 2007 to 2018, compared to 46% growth for all US businesses. Another study by Credit Suisse posits that companies with at least one woman on their board of directors outperformed companies with all-male boards by 26% in terms of share price performance over a six-year period.
Despite these impressive feats, it is still much more challenging for women to lead businesses. Still harder for women-led businesses to succeed. Not only are there few women leading companies, but there are also few women in leadership positions. Within the G20 grouping, there is a significant variation in the average percentage of women in senior leadership positions, ranging from a low 17% in Saudi Arabia to around 35% in Argentina. The average across the G20 countries was 29% in 2020.
In the context of startups, especially in India, we have made impressive progress during the past few years. While an International Finance Corporation (IFC) report of 2014 puts women-led startups at around 11 per cent, the recent study by NASSCOM and ZINNOV points to rising participation of women across Indian startups. The reports posit that 18 per cent of Indian startups have at least one woman founder. Further, about 36 unicorns and potential unicorns in India have at least one woman founder or co-founder. In addition, women-led startups led 17% of all investment deals between 2019 to 2022 in India. However, there is a long road ahead.
There is a growing realisation that women’s entrepreneurship is essential in realising the economy’s full potential and achieving gender equality. Therefore, the promotion of women’s entrepreneurship is necessary. The ways to help women entrepreneurs succeed aren’t always obvious, but they are out there. Thus, there is a need for cross-learning and replication of successful ideas. In this regard, four things, which are critical and complement each other, stand out. These are:
Government Grants and Funding: These can play a crucial role in supporting women entrepreneurs, especially during the initial phase, where seed funding by the government could help a women entrepreneur take the business off the ground. A few notable successful women-led startups that have benefitted from government funding include Bumble, the dating app founded by Whitney Wolfe Herd. Bumble received funding from several resources, including a $2 million grant from the Texas Enterprise Fund, a government grant program. Another household name, Spanx, a women’s undergarment and clothing company founded by Sara Blakely, received a $2.2 million grant from the Georgia Research Alliance, another government program.
Incubators and Accelerators: These are especially beneficial for budding women entrepreneurs facing additional challenges in accessing the resources and networks necessary to succeed. Incubators and accelerators provide resources, training, mentorship, and networking opportunities. Among a few notable examples is Kathryn Minshew’s The Muse-a career advice and job search platform that raised over $100 million in funding and is a Y Combinator accelerator program graduate.
Networking and Community Building: Building a strong network and community of fellow entrepreneurs can be critical to the success of any startup. Many organisations and groups specifically focus on building these networks for women- led startups, including the Women’s Business Enterprise National Council (WBENC) in the United States, the Women in Business Network (WIBN) in the UK, and Women’s Network Australia.
Skilling and Re-skilling: Many educational institutions offer courses, programmes, and degrees specifically focused on entrepreneurship and business management for women. These are the four essential ingredients if we intend to achieve greater participation of women in entrepreneurship. If done right, we would ensure access to capital, resources, and opportunities for women. Further, these also address mentorship requirements and networking, which are essential and enable women to develop capabilities to meet the challenges of tomorrow.
Lastly, we need a sisterhood of entrepreneurs that spans the globe to help one another with experiences, learning and opportunities. India’s G20 presidency is a godsend opportunity that we could use to usher in a promising future for women’s entrepreneurship. The inclusion sub-track within the Startup20 Engagement Group aims to anchor support measures based on learning across G20 and foster an environment for conversations around broad basing women entrepreneurship.
Harjinder Kaur Talwar is Chair-Startup20, Inclusion Taskforce, India.