A STUDY ON WOMEN ENTREPRENEURS: OPPORTUNITIES AND CHALLENGES IN STARTUP

 

                                                         Ms. R. Christa Janet, II BBA and

Mrs. Vanishree .V, M.B.A..,

                        Assistant Professor, Department of Business Administration

                     Chevalier T. Thomas Elizabeth College for Women, Chennai - 11.

ABSTRACT:

The Startup companies around the world are growing in an exponential rate, where enthusiastic youngsters are becoming entrepreneurs, but in India there is growth, it is not enough, there are many talented youngsters capable of bringing about a revolution in the world. There are many obstacles like shyness, finance constraint, illiteracy etc., but this paper studies about the female entrepreneurs, who are now a requirement for our country because they are talented and research shows that they are more creative than men. But they also face the biggest difficulties; some may even step away because of the risk involved in entrepreneurship. Hence, this paper studies about the opportunities given by Government which are available for women to motivate them to become entrepreneurs and the future challenges which they will and solutions to use some challenges as a driving force to reach the peak, and the obstacles which they can overcome.

INTRODUCTION:

    According to Wikipedia, “A startup company or startup or start-up is an entrepreneurial venture or a new business in the form of a company, a partnership or temporary organization designed to search for a repeatable and scalable business model.

 

   The U.S. Small Business Administration describes Startup Company as a “business that is typically technology oriented and has high growth potential”.

 

   Paul Graham says that "A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit". The only essential thing is growth. Everything else we associate with startups follows from growth." Graham added that an entrepreneur starting a startup is committing to solve a harder type of problem than ordinary businesses do. "You're committing to search for one of the rare ideas that generate rapid growth."

 

   Aswath Damodaran stated that the value of a startup firm “rests entirely on its future growth potential.” His definition emphasizes the stage of development rather than the structure of the company or its respective industry. Consequently, he attributes certain characteristics to a startup which include, but are not limited to, its lack of history and past financial statements, its dependency on private equity, and its statistically small rate of survival.

 

WOMEN ENTREPRENEURSHIP:

  

   According to government of India, “An enterprise owned and controlled by a women having a minimum financial interest of 51% of capital and giving at least 51% of the employment generated by the enterprise to women.”

 

   “Women Entrepreneur is a person who accepts challenging role to meet her personal needs and become economically independent. A strong desire to do something positive is an inbuilt quality of entrepreneurial women, who is capable of contributing values in both family and social life”

 

    “Women Entrepreneurship means an act of business ownership and business creation that empowers women economically increases their economic strength as well as position in society”

 

BACKGROUND OF STARTUP:

 

EVOLUTION OF STARTUP COMPANY:

 

   The original entrepreneurs were, of course, traders and merchants. The first known instance of humans trading comes from New Guinea was around 17,000 BCE, where locals exchanged obsidian, a black volcanic glass used to make hunting arrowheads for other needed goods. These early entrepreneurs exchanged one set of goods for another. Agriculture allowed us to start to form larger stationary communities and cities (the basis for civilizations), which set the stage for the development and spread of human knowledge. Agriculture changed everything for humans, enabling the formation of stable rather than migratory populations and laying the foundation for human populations to grow from 15 million to over 7 billion in the millennia ahead.

 

   As methods of agriculture improved, the first towns and cities were seen. Dependable food supplies allowed people to build permanent houses and settle in one area. As settlements increased in size, new social institutions such as religious centers, courts, and marketplaces developed. The advent of towns produced further specialization, creating jobs in tool-making, pottery, carpentry, wool-making, and masonry, among others. The specialist created items faster and of a better quality than each family making its own, increasing standards of living.

 

SUCCESSFUL PLACES WHERE STARTUPS ARE INCREASING:

   #1 Silicon Valley & Bay Area has earned its reputation as the global tech mecca with 14,000 to 19,000 startups and 1.7 to 2.2 million high-tech workers. It is the home to success stories such as Apple, Google, Facebook, and countless others. Just these three companies combined have a market cap of $1.5 trillion and employ more than 165,000 people worldwide. Silicon Valley’s local and global impact is undeniable. Facebook itself claims to have created 4 million jobs globally, including app developers and Facebook marketers. The female founders in North America are estimated to be around 24%.

 

   #2 New York (USA) has evolved into the second strongest startup ecosystem in the world over the past three years, with approximately 7,100 to 9,600 active tech startups and the second highest amount of VC investments. The female founders in New York are found to be around only 16%.

 

   According to Jones Lang LaSalle, local tech employment has grown by as much as 40% since 2008—a slightly higher rate than in Silicon Valley. In total, New York has created approximately 90,000 tech jobs. The city has recognized that supporting startups is an opportunity for the city to upgrade itself and fully adapt to the Information Era. In this spirit, NYC Mayor Bill deBlasio continues to build on former mayor Michael Bloomberg’s tech-focused agenda.

 

#5 Los Angeles Orange County as in 2012 is ranked the third-strongest ecosystem in the world. At $34 billion, it ranks #5 in Ecosystem Value (estimated value of all startups at or prior to exit). There are between 5,500 to 8,300 active tech startups, the highest Startup Output after Silicon Valley and New York.

 

   Los Angeles boasts success stories such as Snap chat, SpaceX, Whisper, and Tinder - just a few reasons why stakeholders around the world pay close attention to L.A.-based tech startups these days. The female founders in L.A. are estimated to be 22%.

 

   Overall, the trend for female entrepreneurs is significantly up—the number of female founders in the global startup ecosystem has grown by 80% over the last three years. In 2012, 10% of startups had a female founder, as compared to the 18% global average among the top 20 in 2015. Chicago, with 30% female founders, has the greatest percentage of women entrepreneurs out of the top 20 startups.

 

 

 

STARTUP IN INDIA:

   In recent years, the Indian startup ecosystem has really taken off and come into its own—driven by factors such as massive funding, consolidation activities, evolving technology and a burgeoning domestic market. The numbers are telling—from 3,100 startups in 2014 to a projection of more than 11,500 by 2020, this is certainly not a passing trend. It’s a revolution. And it’s going to change the way the markets are working today in India.

Indian Startup scenario before Independence:

   The colonial era saw entrepreneurship to be confined by the boundaries of social, cultural and religious rigidities. Further, the colonial rule brought in an array of political and economic factors that were non-conducive for entrepreneurship. The volatile political environment, lack of favorable laws, harsh tax policies restricted the surge of entrepreneurship. The education system did nothing to encourage emergence of startups during this period. Slowly, the social reforms, rising nationalism and betterment of education brought steady change in the scenario.

   In spite of these drawbacks, the East India Company, deliberately or accidentally, seems to have played a vital role in the emergence of Indian entrepreneurs. The popularity of swadeshi campaign, a campaign focused on the use of indigenous goods by locals, is also believed to have played a significant role in the growth of startups in the country.

   The period between the world wars was marked by the visible growth of entrepreneurship in India. The emergence of the Managing Agency System played a significant role in growth of entrepreneurship during this period. The following decades brought many opportunities for business that was effectively capitalized by entrepreneurs. This coupled with the society attitude broadened the vision for the Indian business class. This remained to be the backdrop for the growth of Indian entrepreneurship after Independence.

Growth of Entrepreneurship after Independence:

   Independence was marked by significant shift in the entrepreneurial sector. With the new found freedom, entrepreneurs gained the confidence and belief to pursue their entrepreneurial dreams. Need of employment and regional development paved way for startups. However, during this period policies were not formulated with any special emphasis on entrepreneurship. Development of industries on large scale was still the focus.

Current Status of Startup in India:

   According to “the Global Startup Ecosystem Ranking 2015” report, Bangalore, India’s third most populous city has emerged as the startup capital of India. The city is home to approximately 3,100 to 4,900 active tech startups and has achieved the second highest growth rate for exit volume and VC investment among the top 20. As a result, Bangalore moved up four positions to #15 in 2015, advancing from #19 in the 2012 ranking. Most notably, Bangalore’s venture capital investments in 2014amounted to approximately $2.25 billion, growing 4x to land at #7 among the top 20.Recent success stories such as Flipkart and InMobi are part of the unicorn club with valuations beyond $1 billion. Their success helps inject wealth and expertise into the ecosystem. This in turn increases the attention of the international investor community, who are eager to find high potential startups. With a median age of 28.5 years, Bangalore is home to the youngest entrepreneurs in the region (14% below regional and 27% below Silicon Valley average).

   The Indian hub of Bangalore has had explosive growth in the last few years. To many eyes, this rise is unexpected. For the last couple of decades, Bangalore has been mostly an outsourcing center, hardly characterized for the innovative culture required for creating new technology startups. $2.256 billion of venture capital was deployed in Bangalore in 2014, #7 among all startup ecosystems. Bangalore also boasts an incredibly youthful startup ecosystem, with the youngest average founders’ age of all the top 20 ecosystems. The percentage of women entrepreneurs in Bangalore is 11%.

 

SCOPE OF THE STUDY:

 

   The paper studies about the opportunities available for women entrepreneurs, the challenges which they face because they are business “women”. Since, women are skilled professionals in taking care of their family, at present some are going beyond their boundary by trying out something adventurous and thrilling like entrepreneurship. But they are facing many difficulties and they require more support, which will encourage them to develop themselves in places which they are lacking.

 

   The scope of the paper is it studies about global women entrepreneurs and the percentage of women entrepreneurs in highly developed and the developing countries. But the drawback is only few are taken for this study.

 

OBJECTIVES OF THE STUDY:

·         To know the startup ecosystem for women entrepreneurs.

 

·         To study the opportunities available for entrepreneurs and the support given by the Government to sustain them.

 

·         To research the challenges and obstacles faced by women in business startups.

 

·         To suggest solutions to overcome the obstacles.

LIMITATIONS OF THE STUDY:

   The present study is based on the secondary data. The secondary data were collected from books, journals and websites.

CHALLENGES FACED BY WOMEN ENTREPRENEURS:

 

(1)   Gender Inequality: Even though our constitution speaks of equality between genders, male superiority is still the order of the day. Women are not treated equal to men. Their entry into business requires the approval of the head of the family who is mostly a male member. Entrepreneurship has traditionally been seen as a male task. All these hamper the growth of women entrepreneurs.

 

(2)   Heavy Competition: Many of the women enterprises have imperfect organizational set up. But they have to face severe competition from organized industries.

 

(3)   Lack of education: Women in India are lagging far behind in the field of education. Most of the women (around sixty percent of total women) are illiterate. Those who are educated are provided either less or inadequate education than their male counterpart partly due to early marriage, partly due to son’s higher education and partly due to poverty.

 

(4)   Lack of self-confidence: Women entrepreneurs because of their inherent nature, lack self-confidence which is essentially a motivating factor in running an enterprise successfully. They have to strive hard to strike a balance between managing a family and managing an enterprise.

 

(5)   Legal formalities: Fulfilling the legal formalities required for running an enterprise becomes an uphill task on the part of a women entrepreneur because of the prevalence of corrupt practices in government offices and procedural delays for various licenses, electricity, and water and shed allotments. In such situations women entrepreneurs find it hard to concentrate on the smooth working of the enterprise.

 

(6)   Low risk-bearing capacity: Women in India are by nature weak, shy and mild. They cannot bear the amount of risk which is essential for running an enterprise. Lack of education, training and financial support from outsides also reduce their ability to bear the risk involved in an enterprises.

 

(7)   Skepticism of Financial Institution: Financial Institutions and bankers are skeptical about the entrepreneurial abilities of women. The bankers put unrealistic and unreasonable securities to get loan to women entrepreneurs.

 

   According to a report by the United Nations Industrial Development Organization (UNIDO), "despite evidence that woman’s loan repayment rates are higher than men's, women still face more difficulties in obtaining credit”.

 

(8)   Lack of entrepreneurial aptitude: Lack of entrepreneurial aptitude is a matter of concern for women entrepreneurs. They have no entrepreneurial bent of mind. Even after attending various training programs on entrepreneur ship they fail to tide over the risks and troubles that may come up in an organizational working.

 

(9)   Obsolescence of technology & resulting increase in cost of production: Several factors including inefficient management contribute to the high cost of production which stands as a stumbling block before women entrepreneurs. Women entrepreneurs face technology obsolescence due to non-adoption or slow adoption to changing technology which is a major factor of high cost of production.

 

(10)  Problem of finance: Women entrepreneurs suffer a lot in raising and meeting the financial needs of the business. Bankers, creditors and financial institutions are not coming forward to provide financial assistance to women borrowers on the ground of their less creditworthiness and more chances of failure.

 

 

 

CHALLENGES FACED BY WOMEN IN STARTUPS:

• Raising Funds: Women Entrepreneurs find it difficult to raise funds in the startup financial market. They are either dependent on their own funds or funds provided by their family and friends. Financial Institutions generally consider women loaners as higher risk than men.
•  Registration: Women Startup Initiators are quite apprehensive about the lengthy registration process of the Government. The lack of time due to balancing family and startup motive makes women entrepreneur skeptical towards the registration formalities and the time limit for registration.
•  Paying Tax: The gestation period for stabilizing the startup by women entrepreneurs is little more than men entrepreneurs so the exemption of three years can be increased for women entrepreneurs to take up startup confidently. 
•  Patent rights and patent Registration: The delay in giving IPR (Intellectual Property Rights) by the bodies in charge puts the entrepreneurs in trouble for getting their rights on their ideas and products. This challenge hampers even women entrepreneurs in getting their IP Rights.

START UP ECOSYSTEM IN INDIA:

Projects Launched to motivate Startup in India:

(a)   “Action Plan” Startup India Project: The “Action Plan” is an exclusive project launched for entrepreneurs where its aim is to increase new companies in India which will bring in employment opportunities, growth in GDP of India.

   The campaign was first announced by the Prime Minister in his 15^th August, address from the Red Fort. The event was inaugurated on 16 January 2016 by the finance minister Arun Jaitley. Among the attendees were around 40 top CEOs and startup founders and investors from Silicon Valley as special guests.

Investments: SoftBank, which is headquartered in Japan, has invested $2 billion into Indian startups. The Japanese firm had pledged the total investments at $10 billion.

 

Announcements:

 

·         In a major announcement, he said there will be income tax exemption to startups for the first three years.

·          He also promised faster patent registrations and quicker exits for companies. Norms will be relaxed for public procurement of startups.

·         Innovation core programs for students in 5 lakh schools.

·         There will be an 80 per cent rebate in patent costs.

·         A mobile app will be launched on April 1 through which startups can be registered in a day. There will also be a portal for clearances, approvals and registrations

·         Startups don’t have to be billion dollar ventures. Even if it employs five people, it is contributing to the Indian economy.

·         Startups are not just because of entrepreneurial capabilities, but also for the aspect of risk taking

·         The Standup India initiative is also aimed at promoting entrepreneurship among SCs/STs, women communities.

 

 

 

 

(b)   TREAD Subsidy Scheme for Women:

 

   Trade Related Entrepreneurship Assistance and Development (TREAD) Scheme for Women is a subsidy in India provided by the Ministry of Micro, Small & Medium Enterprises. Government provides subsidy of up to 30% of the total project cost as appraised by lending institutions which would finance the remaining 70% as loan Assistance to applicant women. Women eligible under this scheme are who have no easy access to credit from banks due to their cumbersome procedures and the inability of poor & usually illiterate/semi-literate women to provide adequate security demanded by banks in the form of collaterals. Further, the request for subsidy under this scheme must be made by a NGO for a number of individual or group(s) women.     

 

(c)    Bharatiya Mahila Bank

 

   Bharatiya Mahila Bank is a one of a kind Bank in India formed with a vision of economic empowerment for women. Bharatiya Mahila Bank commenced operations in 2013 and currently has 45 branches across India.

 

   Bharatiya Mahila Bank focuses on women entrepreneurship with special attention to economically neglected, deprived, and discriminated, under banked, unbanked, rural and urban women to ensure inclusive and sustainable growth.

 

Some of the popular loans provided by Bharatiya Mahila Bank for Women Entrepreneurs are:

 

1.      BMB Shringaar – Loan for Beauty Parlor /Saloon/Spa: Collateral free loan of up to 1 crore is provided under the CGTMSE Scheme for setting up of a beauty parlor or saloon or spa. The loan is provided for a term of up to 7 years with an interest rate of 12.25% (Base Rate + 2.00%).

 

2.      BMB Annapurna – Loan for Food Business: Collateral free loan of up to 1 crore is provided under the CGTMSE Scheme for setting up of a food business. The loan is provided for a term of up to 3 years with an interest rate of11.75% (Base Rate + 1.50%).

 

3.      BMB Parvarish – Loan for Day Care Centre: Collateral free loan of up to 1 crore is provided under the CGTMSE Scheme for setting up of child day care center. The loan is provided for a term of up to 5 years with an interest rate of 12.25% (Base Rate + 2.00%).

 

(d)   Mahila Coir Yojana:

 

   The Mahila Coir Yojana Subsidy Scheme was promoted to provide self-employment to rural women artisans in regions producing coir fibre. Conversion of coir fibre into yarn on motorized ratts in rural households provides scope for large scale employment, improvement in productivity and quality, better working conditions and higher income. The scheme envisages distribution of motorized ratts/ motorized traditional ratts for spinning coir yarn to Women artisans. As per the scheme, the Coir Board will provide 75% of the cost of the motorized ratt as one time subsidy provided the other 25% is raised by the beneficiary through voluntary organizations/ financial institutions/own sources. Not more than one artisan per household would be eligible to receive assistance under the scheme.

 

(e)    Mahila Udayam Nidhi:

 

   Mahila Udayam Nidhi is a subsidy scheme for women entrepreneurs from Puducherry Government. Women entrepreneurs setting up a new SSI unit in the service sector in Puducherry State can avail this scheme.

 

   As per the scheme, for a project cost of Rs.10 lakhs, seed capital of 25% is provided as a subsidy and the balance 75% would be funded as a Term Loan (65%) and Promoter Contribution (10%). The term loan would have a repayment period of 6to 8 years including moratorium of 1 to 2 years.

 

FINDINGS:

·         Based on the data, it is found that women entrepreneurs are in need for the economic development, but due to lack of self-confidence, education, and new exposure towards business they are little hesitant to become entrepreneurs.

·         The present entrepreneurial and startup ecosystem has given opportunities for women to overcome the fear and the challenges.

·         The present era is more conducive for women to take up startup initiative.

SUGGESTIONS:

Women Entrepreneurs are a recent trend in the globe, but due to their insecurities, lack of self-confidence and fear they are not willing to step out.

Educating women and creating awareness about the risk factor and the counter measures which can be taken to sustain during a crisis can help them to be successful.

They can start small and see how well it goes with minimum members and they can evaluate themselves if they are able to manage this small business, helping them to balance the work and family time. If they are comfortable then they can frame their idea of a large business and consult with an experienced entrepreneur who can guide them, by counselling them and giving advice and sharing their experience with them.

CONCLUSION:

   According to “State of the Startup 2015” report, “57% of women are more likely to form startups than men. Women bring their own unique perspective to startups in terms of the type of business, how they run things, and their own work/life balance.” Therefore women are capable and they have the efficiency to bring in new ideas for the development of our country and the world.  

  To conclude women entrepreneurs are likely to contribute for the economic and the social development for the country. The present entrepreneurial and startup ecosystem in India gives more opportunities for women to try out their entrepreneurial skills and become successful.

REFERENCES:

“Step taken by Government to Develop Women Entrepreneurs in India”-ww.publishyourarticles.net

“Survey Report (2015 State of the Startup)” - www.sage.com

“The Global Startup Ecosystem Ranking 2015” by Steve Blank– www.google.com

“Problems encountered by Women Entrepreneurs in India” by Dr. A.B. Siddiqui

“Startup Company” – www.wikipedia.com

“Startup Company India” - www.wikipedia.com

“Startup India: Key announcements in the action plan unveiled by PM Modi”-ww.indianexpress.com

 

“Women Entrepreneurs: Concept and Functions of Women Entrepreneurs- Explained!” –                                                                                                                 www.yourarticlelibrary.com