Finding More Investment Support for Women-Led Startups


Ajaita Shah has seen firsthand how women consistently outperform other retailers in selling solar-powered lamps, sewing machines and other solar appliances in poor rural areas of India.

“Perhaps it’s because they are more hungry for income … or have something to prove to themselves and their families,” said Shah, CEO and founder of Frontier Markets, which has built a network of 1,000 women salespeople, called Solar Sahelis.

Her company is also performing well, reaching 400,000 households in the past six years and earning a profit in each of the past two years. Yet, despite this success, Shah struggles to raise money. “As an entrepreneur, I have been given the accolades, but not the money to back what I do,” she said.

Shah’s situation is not unusual. Recent research shows that early-stage startups co-run by women consistently outperform their male-only counterparts on key barometers such as reporting positive revenues; yet they are significantly less likely to attract equity investors.

The report, produced by the Global Accelerator Learning Initiative (GALI), analyzed nearly 14,000 early-stage ventures from 2013 to 2017, more than half of them run or co-run by women.

Using data from over 150 countries, half of the ventures being in the United States, Mexico, India, Chile and Uganda, the researchers found that women co-run ventures were nearly 20 percent more likely to report positive revenues in the prior year than all-male ventures – 48.7 percent compared to 40.9 percent.

Yet, despite these results, early-stage ventures listing at least one woman among the top three founders were half as likely to attract equity investment – 12 percent, compared to 18.5 percent for ventures with all-male teams. The gap for women-led ventures was even bigger.

Like Shah, Aneri Pradhan, founder and executive director of ENVenture, which provides seed financing for small clean energy ventures in rural areas of Uganda, was not surprised by the research results.. (ENVenture and Frontier Markets are both formal partners of Sustainable Energy for All’s People-Centered Accelerator).

“A lot of talk about supporting women entrepreneurs is hot air,” said Pradhan, whose enterprise has created 350 jobs, more than 70 percent of them for women. “If the action followed the talk, we would see far more investments being made into women-led enterprises.

“I think it is even more true of the Social Enterprises Sector,” she added. “At least venture capitalists are acknowledging gender diversity is a major problem.”

The report’s findings are consistent with a recent report, Levers of Change: How Global Trends Impact Gender Equality and Social Inclusion to Sustainable Energy, published earlier this year by SEforALL and Energia. It showed how women are often not given equal opportunities to take advantage of key sustainable energy trends, such as more affordable off-grid renewable energy technologies and access to mobile money (via mobile phones) and consumer finance that would enable them to finance a solar home system or clean cooking stove.

So what can be done to eliminate this gender financing bias?

Pradhan says impact investors need to showcase more clearly how they are actively funding women, especially women of color entrepreneurs. “They (investors) have a unique amount of power by directly controlling major finance flows,” she said. “To my knowledge, no impact investor is publishing data on their portfolio diversity of women vs. male founders of social enterprises.”

An article on the GALI study in the Stanford Social Innovation Review highlights some recent progress in tackling this bias issue. Among the examples it cites is Asha Impact, an impact investment platform for Indian business leaders which has a 50-50 ratio of men to women at all levels of the organization. Women-run or co-run ventures make up 40 percent of its investment portfolio. These results reflect an explicit investment philosophy focused on social inclusion.

The article by Devyani Singh also cites recent GALI research showing that accelerator programs with a focus on women and other minority groups may improve their ability to drive funding into participating ventures.

“There is a power in numbers, and accelerators that emphasize participation from female entrepreneurs can help build a robust pipeline of entrepreneurship to bridge the gender gap in investment,” Singh wrote.

This last point aligns closely with a primary goal of SEforALL’s People-Centered Accelerator, which aims to help unlock finance from public and private sources for gender equality and women’s empowerment in the energy sector.