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across the table

VCs in India ask women entrepreneurs a different set of questions from the men

I find it fascinating to observe the behaviour of women entrepreneurs in India. These entrepreneurs usually fall in three categories. The first one is a girl straight out of an engineering or business school, full of beans, cheered on by friends, encouraged by her favourite professor, to start a business. It is highly likely that her idea may be incubated on the college campus and she becomes the poster girl for that batch—the girl who sat out of placements to build a business.

In the second category, we have women who take a decade-long sabbatical from their corporate careers to bear the mandatory two kids and then struggle to make a business out of their hobbies—baking chocolates, making papier mache lamps or running a day care centre.

The third category is of those women who never took a break in their corporate careers, worked in large IT MNCs in “the bay area”, and came back to India either because “the girls are growing up” or because “my parents are growing old”. Along with their husbands or friends or former colleagues, they start a business, mostly in the internet space.

In all the three cases, the first round of investment is from father, husband and own savings respectively. Let us say all three types go to market successfully and are convinced that they can scale the business. In order to do so, they need serious funding and they approach venture capitalists.

How do VCs treat this overture? In the first category, the VCs will be somewhat indulgent. They may like her business idea and may even think it has potential but they will not risk investing in it. The questions that weigh against her are the following.

What happens when she gets married? This is a very loaded question with multiple layers. Her getting married could mean moving to another location, it could mean husband does not like the idea of his wife running a business, or expects her to join an MNC and bring home beaucoup bucks, instead of spending time on a yet-to-make-money start-up. How will she manage time after getting married, especially in India where you don’t just marry the guy but his whole family? Or it could mean what happens if she gets pregnant on her honeymoon? How will she manage the rigour of a first-time pregnancy with that of an equally demanding start-up?

What happens if she gets bored with the idea? This one is layered too. She may get bored simply because she is fickle. Or she may get bored because she is not seeing the magic numbers she expected. Or she may get bored because husband is not as generous as dad when it comes to shopping money.

What happens if marriage does not turn out to be the fairy tale that it was touted to be? Will she be able to run the business when she’s on an emotional roller-coaster in a soured marriage? Will her start-up be the first casualty both because she is not ‘with it’ emotionally and because she needs financial security now? Will taking up a job make better economic sense for her?

Interestingly, all the reasons for not investing are to do with her being a woman and nothing to do with the idea. So the VCs may suggest she get a couple of good male co-founders to offset the churn created by her gender.

In the second category, the rejection is point blank and idea-related, not so much gender-related. The VCs will tell her that her business idea is not feasible to scale, and if scaled not profitable enough. Why? Because she is messing around with a hobby and pretending to build a business around it.

In the third category, the woman entrepreneur’s behaviour  becomes the show-stopper. She creates an excellent pitch and makes a kickass presentation to the VC, she is extremely knowledgeable about her domain, she knows who her customer is and she has all her resource requirement pat down to the last penny for the next three years. The several rounds of meetings go extremely well and on the day the term sheet has to be discussed she develops cold feet and insists on bringing a husband or a male friend to the table. Why? Because she thinks she will be short-changed in the negotiation because she is a woman. That is when the VCs develop cold feet and the deal is off the table.

Moral of the story? Entrepreneur first, woman next! There are a few women who have beaten these odds, not just by having faith and conviction in their business idea but by articulating it in no uncertain terms. So at the deal table what the VCs see is not a woman but a consummate entrepreneur.

More about Nandini here. We welcome your comments at ideas@qz.com.

This article is a part of Quartz India. For more, follow this link.

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