Startups founded or co-founded by women in India garnered about $3.46 billion in funding in 2022, accounting for nearly 13% of the total private capital raised by startups during the year, finds DealStreetAsia’s latest report on the gender funding gap in India.
Funding for female-founded startups – defined as startups with at least one female founder – dropped 48% from 2021’s $6.7 billion. It is noteworthy that total private capital raised by all startups in 2022 dropped 42.4% to $26.5 billion from a record haul of $46 billion in 2021.
The funding decline was steeper for female-founded startups not only in absolute terms but also as a proportion of total capital raised in 2022. Startups with at least one female founder had accounted for a 14.56% share of all fundraising in 2021.
“One of the biggest reasons for the gender gap in venture funding is that there are fewer women founders, to begin with. Even though these numbers are improving, and female-led founding teams are seeing an improvement in funding, there is still a long way to go,” fintech startup Progcap’s co-founder Pallavi Shrivastava said.
Funding by startups founded solely by women in India jumped almost 33% to $154.8 million in 2022 from $116.6 million in the previous year. However, this is a mere 0.6% of the total funding bagged by all private companies in 2022. The share was even lower at 0.25% in 2021.
The DealStreetAsia report also looked at funding secured by female-founded startups with a female CEO. These startups accounted for about 30% of the total funding raised by female-founded startups.
“In industries where men dominate, male-led businesses raise, on average, ten times as much money as female-led businesses. Women are still seen as “different” and historically, they have not been welcomed into the “club” where these vital connections between entrepreneurs, investors, and mentors are made and fostered,” pointed out Dr Somdutta Singh, the founder and CEO of Bengaluru-based e-commerce accelerator Assiduus Global Inc.
With a $2.15-billion kitty, Bengaluru topped the charts again this year with the highest share of capital raised and most deals closed among female-founded startups. Among verticals, edtech startups were the biggest fundraiser, while e-commerce led the race in terms of deal volume.
The report features interviews with several female founders who share the challenges and biases they have experienced.
“Investors assume women start their companies to sustain their lifestyle in the short term, rather than being committed to the long haul. There are quite a few psychological explanations that account for why, but the fact remains that biases – conscious or subconscious – exist in venture capital, and that’s only now beginning to change,” said Neha Sampat, co-founder & CEO, Contentstack.
Asked what can be done to change the culture and mindset within the VC industry to be more inclusive and supportive of female founders, Sampat said, “There are practical ways to do that, like ensuring that no less than 50% of members on a panel are women. More than half is even better! We should work to find under-represented talent. Search for those candidates outside of traditional pipelines.”
Female Founders in India 2022 provides:
- Data on fundraising by female-founded startups in 2022 and comparison with 2021
- Fundraising share of cities, verticals and funding stages
- Deal volume by cities, verticals and funding stages
- Data on fundraising by startups with only female founder(s)
- Data on fundraising by female-founded startups with a female CEO
- A list of top dealmakers among female-founded startups
- Interviews with female founders on their entrepreneurship journey and challenges