Women-led tech startups face cash crunch

Women-led tech startups face cash crunch
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Women-led tech startups face cash crunch

Highlights

Suffer funding drop of 24% in H1

Bengaluru: Amid Covid-19, funding for women-founded and co-founded startups in India fell 24 per cent to $280 million in the first half of this year, compared to $369 million in the same period last year, said a new report on Thursday.

In H1 2020, funding declined across all three stages -- early, growth, and late -- compared to H1 2019, said the report by MAKERS India, a strategic partnership between Verizon Media and YourStory Media. Many women-led startups scaled down their operations or pivoted their business models to stay afloat amid the pandemic, said the report titled "State of Women in Tech Entrepreneurship in India 2020."

Women behind some apparel startups branched out to manufacturing protective face masks and PPE kits. However, despite Covid-19, startups with at least one-woman founder were able to secure 71 funding deals in H1 2020, at par with H1 2019 (70 deals) and H1 2018 (70 deals).

The report is based on in-depth interviews with 100 women tech entrepreneurs across sectors and cities in India, independent research and analysis of data for the period between January 2018 and June 2020.

The research showed that there has been a phenomenal '11X increase' in the number of women entrepreneurs in tech in the last decade (2010- 2020). Female-founded and co-founded tech startups in India currently stand at 285, it said.

Between 1990 and 2010, only 26 startups had at least one-woman founder. However, 75 startups added at least one-woman founder by 2014 and 184 more by 2019. The total funding raised by tech startups led by women founders only remains minuscule -- just 1.43 per cent ($480 million) across 80 deals between January 2018 and June 2020, said the report.

During the same period, funding raised by startups with at least one-woman founder accounted for only 5.77 per cent ($1.69 billion) across 378 deals of the total funding. However, women entrepreneurs in tech are exploring offbeat, and male dominated sectors such as automotive, cleantech, hyperlocal, SaaS, PaaS, spacetech, sports and online gaming.

This trend has grown through the Covid pandemic, with investors testing the waters in niche areas.

While fintech and financial services are sectors that raised the highest amount in funding and saw the most number of deals by women entrepreneurs between January 2018 and June 2020, edtech was a top gainer in terms of funding in H1 2020.

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