Timely help can pave way for more Falguni Nayars
A large number of women in the startup universe facing challenges of finance and balancing family and work life
India's only unicorn led by a woman has had a tremendous response to its stock market listing. Nykaa, the company founded by Falguni Nayar, has now touched a market valuation of Rs 1,00,000 crore. The net worth of the 58 year old self – made business tycoon is come into the billionaire category. She is ranked among the wealthiest in the world. The fact that Nykaa is a unicorn has been known for quite a while now but the successful IPO has merely highlighted the fact that a woman without any previous business experience can reach to the heights of the corporate world.
Nayar is undoubtedly going to be a role model for women in this country and could potentially spur many into opting for entrepreneurship rather than taking the safe route of being employed by others. Her academic and previous career credentials are impeccable. An IIM alumnus, she reached the top at one of the country's leading banks, Kotak Mahindra. Yet there are many women, like her, with equally brilliant academic and professional backgrounds. In fact, the banking industry has had more women, than most other sectors, who have reached leadership positions. Few of them, if any at all, have taken the plunge into the uncharted waters of startups and that too, at the age of 50 years.
Her success needs to be seen in the backdrop of the fact that not many women are able to succeed as entrepreneurs. There are some notable exceptions including Kiran Mazumdar-Shaw who started the biotechnology firm, Biocon which has a market cap of 4.4 billion dollars. There are also innumerable women in the startup universe but most are facing the additional challenges posed for them in the business arena. The most critical is that of finance. Study after study has shown that startups with women founders face much greater hurdles in raising finance than those with an all-male founders team. This has been seen at a global as well as domestic level. One of the fall-outs of the difficulty in obtaining finance is that many tend to self-finance their ventures and this, in turn, tends to make them more unstable. Apparently banks consider women less credit-worthy and have an impression that they may withdraw from business ventures at any time due to family responsibilities. This is an attitude that clearly needs to change given the fact that women are reported to be more responsible about loan repayments.
Another problem faced by women entrepreneurs in this country is the issue of balancing family and work life. Women tend to be saddled with the entire burden of taking care of home and family life which is difficult to manage along with running a full-time business.
Yet with all these handicaps, there has been global surge in women entrepreneurs. The number of such entrepreneurs has risen by over 116 per cent over the past 20 years, according to Business Insider. As far as India is concerned, many small and tiny businesses are owned by women but these are often in the informal sector and thus find it difficult even to avail of bank loans. Lack of education also becomes a handicap in ensuring that these micro enterprises are sustained in the long run. Although the government has tried to put a focus on supporting women in entrepreneurship through the Mudra loan scheme, it has not done enough to provide a supportive infrastructure for such enterprises. The scheme itself provides the benefit of giving loans up to Rs 10,00,000 without any collateral to set up a small or micro-enterprises. This is definitely a boon for women who usually do not own property and thus find it difficult to provide collateral for loans. At the same time, it would be useful if technical consultancy was also provided to such micro-enterprises enable them to tackle other marketing and infrastructure related issues. These tiny businesses may not become unicorns but they can certainly end up being profitable enterprises that create jobs and sustain livelihoods. In this regard, it must be pointed out that Nayar's background as an investment banker would have been an asset in dealing with the complexity of financial issues that go along with starting a business. This includes ensuring adequate cash flows and working capital requirements. At the same time, this is not an insurmountable obstacle as those without such experience can bring financial experts on board the team to deal with these critical issues. What is of greater importance is that women should have the confidence to manage their business teams without getting intimidated by the fact that the corporate world, even now, remains a male-dominated arena.
Falguni Nayar certainly had that confidence and it is what has propelled Nykaa into the league of unicorns. It must be pointed out that during the pandemic when many online and offline ventures were not able to deal with the collapse in demand, her company shifted gears and ended up making a small profit. From selling beauty related goods, Nykaa started daily essential goods along with a line of hygiene essentials. These included hand sanitisers and cleansers, masks, hand washes, personal protective equipment (PPE) and thermometers. It was this pivot that sustained the company and ensured that it ended the 2020-21 financial with a profit of Rs 61 crore. It is one of the rare unicorns that is actually turning a profit.
The Nykaa story is inspirational for women seeking to become entrepreneurs in this country. One can only hope that more women seek to emulate Nayar's success and enter the startup space. But it would be in the fitness of things for the government and the banking industry to give technical support to enable more women to go into business. This would go a long way in ensuring that gender does not become a barrier to setting up viable enterprises.