Breaking barriers: Unveiling the challenges faced by women entrepreneurs

The theme for this year's Women's Day, "Invest in women: Accelerate Progress," resonates deeply in today's entrepreneurial landscape. While recent years have seen a commendable increase in the number of female-led startups, a persistent challenge remains – the funding gap. As we continue to celebrate the rise of female entrepreneurs, it is crucial to acknowledge the systemic challenges they face, particularly the fact that investors still hesitate to trust solo women founders, creating barriers to their success. 

Despite constituting half the population, women in Bangladesh hold a disproportionately low share in the formal workforce and leadership roles. However, the startup landscape is witnessing a positive shift. In recent years, we have witnessed a commendable surge in the number of female-led startups. Women entrepreneurs are breaking barriers, challenging stereotypes, and contributing significantly to economic growth and innovation. This surge is attributed to factors like increased government support, digital literacy initiatives, and a growing awareness of entrepreneurial opportunities. Their ventures span diverse sectors, from technology to social impact, showcasing their resilience and creativity.

However, this burgeoning female entrepreneurship faces a significant roadblock – access to funding. A 2023 study by the Bangladesh Angel Network (BAN) revealed that only 7% of venture capital funding in Bangladesh goes to startups led by women. This trend persists despite studies demonstrating the financial viability and success rates of women-led businesses. This stark gap stems from various factors, with the prominent one being the prevailing trust deficit towards solo women founders. Investors often exhibit biases, questioning their leadership capabilities and ability to scale ventures. This bias is entrenched in societal norms and unconscious biases, perpetuating a cycle of underrepresentation and missed opportunities. Consequently, women founders face uphill battles in convincing investors of their potential, diverting focus from innovation to validation.

Access to traditional funding sources like bank loans is another challenge.  Women are less likely to own property or assets compared to men and these assets are often used as collateral for loans, leaving women entrepreneurs without the necessary security to secure funding.  This creates a catch-22 situation – they need capital to grow their businesses, but traditional lenders require collateral they often lack due to historical social and economic factors. It is also to be noted that the underrepresentation of women in venture capital firms exacerbates the funding gap. With fewer female investors at the table, there is a lack of understanding and empathy towards the unique challenges faced by women entrepreneurs. This perpetuates a cycle of exclusion and reinforces existing biases within the investment ecosystem. Finally, the world of venture capital often relies heavily on established networks.  Investors are more likely to fund ventures recommended by trusted peers or those with whom they have a pre-existing relationship.  Unfortunately, women entrepreneurs often lack access to these networks, which are largely male-dominated.  

Creating a women-friendly investment regime is not just a matter of equity; it is a strategic imperative for driving economic growth and innovation. Embracing diversity in entrepreneurship unlocks untapped talent pools, fosters inclusive innovation, and enhances market responsiveness. By investing in women, we diversify perspectives, mitigate groupthink, and catalyse disruptive ideas that address complex societal challenges. Therefore, in order to realise the full potential of women entrepreneurs, stakeholders must collaborate to dismantle barriers and foster an enabling ecosystem. 

This entails targeted efforts to address biases in investment decision-making, including mentorship programs, unconscious bias training, and diverse investment panels. We need to design inclusive funding mechanisms that prioritise equity and diversity that can level the playing field for women founders. Initiatives such as gender-lens investing, impact investing, and venture funds focused on supporting women-led ventures can provide alternative sources of capital and bridge the funding gap. Policymakers also play a crucial role in shaping the investment landscape. Implementing policies that promote gender diversity in entrepreneurship, such as tax incentives for investors supporting women-led ventures or procurement policies favouring diverse suppliers, can create a more conducive environment for women entrepreneurs to thrive.

Studies by the World Bank and International Labour Organization demonstrate that investing in women's entrepreneurship has a ripple effect, leading to job creation, economic diversification, and poverty reduction. Accelerating progress requires collective action to dismantle systemic barriers, empower women entrepreneurs, and foster inclusive ecosystems. By embracing diversity in entrepreneurship and prioritising equity in investment, we not only drive economic prosperity but also pave the way for a more just and innovative future.