Women Entrepreneurs Experience Gender Bias When Seeking Investment for Their Business: Study
Sat, April 10, 2021

Women Entrepreneurs Experience Gender Bias When Seeking Investment for Their Business: Study

More than a third of female entrepreneurs in the world still experience gender bias when seeking investment for their business / Photo by Sergey Nivens via 123rf

 

A study conducted by HSBC Private Banking has revealed that more than a third of female entrepreneurs in the world still experience gender bias when seeking investment for their business. 

The investment banking company shares that American and British women experienced the most gender bias when trying to raise capital for their venture compared to women in other countries. For their study, HSBC surveyed over 1,200 entrepreneurs and more than half of them were women. The participants were from eight countries in Asia, Europe, the Middle East, and North America. The survey was conducted between June and July this year and it was done online. There was an in-depth interview conducted by the HSBC team with female business leaders located in Asia and Europe.

 

American and British women experience the most gender bias

In the United Kingdom, 54 percent of female entrepreneurs reported being subjected to gender bias from potential investors during the funding rounds while only 46 percent of American female entrepreneurs experienced the same. On the other hand, women entrepreneurs in China experienced gender bias the least when seeking investment in their business. Only 17 percent of the participants from China said that they felt the investors were prejudiced against them because they were female.

Aside from the UK and US, the other countries where female entrepreneurs experienced gender bias include Singapore (41 percent), Hong Kong (31 percent), United Arab Emirates (31 percent), Saudi Arabia (31 percent), France (22 percent), and China as the last in rank. To be a part of the study, participants needed to have secured or been a part of the process of securing investment of at least $122,600 or £100,000 from investors.

 

 

The participants said that gender bias was often visible in the form of questions asked of them about their credibility as leaders of business or the circumstances of their family. More female than male participants admitted being asked more questions about their personal life instead of their business idea. On the other hand, men were asked mostly about their business idea.

The report further stated that although entrepreneurship has been flourishing as a whole, the fact still exists that women entrepreneurs represent only 3 percent of the deal flow. Statistically, there are still female entrepreneurs who are playing “catch-up.” The report also acknowledges the proportion of startups that are led by women.

 

Investment gaps

Gender bias from investors is usually translated when women secure an average of 5 percent less capital compared to their male counterparts. HSBC claims that such a discrepancy in the US even widened to 8 percent whereas women entrepreneurs in the UK and France experience 6 and 7 percent investment gaps, respectively. Meanwhile, female entrepreneurs in the United Arab Emirates and Saudi Arabia achieved a high proportion of funding targets, achieving an average of 45 percent capital targets from their investors. Next to the most successful female entrepreneurs in securing a capital were those from China, reaching a 40 percent average of their capital targets.

 

More female than male participants admitted being asked more questions about their personal life instead of their business idea / Photo by choreograph via 123rf

 

Men vs. women entrepreneurs in securing capital from investors

Worldwide, female entrepreneurs secured only an average of 57 percent from the capital they sought from various investors. Male entrepreneurs, on the other hand, were able to secure an average of 61 percent from the capital they sought from investors.

Indian-based baby products and skincare provider The Moms Co’s Founder and CEO Malika Sadani said via Entrepreneur.com that “people are still apprehensive about a woman running a business” and the same is true for female employees working in a company. In India alone, only 14 percent of the total entrepreneurs are women, based on the Sixth Economic Census. The most common challenge that women entrepreneurs face is the difficulty to raise funds from investors. Sadani said that women have to stop “shying away” from leadership roles and run the show. 

India’s largest logistics training provider Safeducate’s Cofounder and CEO Divya Jain also shared the same experience when she started her business. She said people did not take her seriously. Many believed that she was just the “face” of the company and her father-in-law, whose company backed Safeducate, was the person running the firm. When she would go to meetings, people would often ask her if they could meet her father-in-law or her husband instead of her. 

Commenting on the HSBC research, Investing Women’s CEO Jackie Waring said that venture capital firms have witnessed firsthand that women seeking capital for their businesses face various challenges, such as the market being male-dominated.

 

 

The Organisation for Economic Co-operation and Development database notes the percentage of women entrepreneurs by year for certain countries:

Australia: 4.1 percent in 2017
Canada: 2.6 percent in 2017
Denmark: 1.8 percent in 2016
France: 2.2 percent in 2017
Korea: 3.4 percent in 2016
United States: 1.2 percent in 2017
United Kingdom: 1.4 percent in 2017
Sweden: 1.6 percent in 2016