Finding innovative funding: Unlocking capital for women founders

Women often struggle to receive the capital they need to grow their businesses, as they remain subject to gender bias and often lack the networks and collateral required. Only two per cent of venture capital goes to women led startups, and the World Economic Forum estimates it will take 267 years to close the economic gender gap.

Financial products are often not designed for women and women led businesses. The women we interviewed have emphasized the need to develop new financial products and provide more flexibility in credit ratings and key performance indicators. Traditional financing may not always be the right fit for women founders of inclusive businesses.

One way to increase impact for women’s empowerment is to invest in funds or intermediaries that invest in women. Some of these funds are women led and managed, to overcome an implicit gender bias in investment.

Women founders and investors create a larger development impact by focusing on key outcomes and speaking with women directly to determine their priorities, and then measuring these outcomes specifically.

Storytelling also provides a means to create networks and strengthen the business case for investing in women.

female shop owner in South Sudan

Only two per cent of venture capital goes to women led startups.

Women founders are building inclusive and innovative business models that serve the traditionally underserved around the globe. This issue of CLUED-iN features many of these groundbreaking women, from Ajaita Shah, who developed an all-woman sales force in rural India, to Brigitha Faustin, whose sunflower oil is produced mainly by women and sold at accessible prices for the local market. However, women still struggle to receive the capital they need to grow their businesses, remaining subject to gender bias and lacking the networks or collateral required.

The gender finance gap at times seems unbridgeable, when the World Economic Forum estimates that it will take 267 years to close the economic gender gap globally. At the same time, only two per cent of venture capital goes to women-led startups.

In this publication, founders, academics and investors alike highlight some of the keys to unlocking capital for women owned and women focused businesses, including the following:

elderly Asian woman rowing boat

The gender finance gap at times seems unbridgeable.

Design alternative products when traditional indicators don’t apply

Not only is accessing finance often difficult for women owned businesses, but many financial products are also not designed for women. It is for this reason that Chetna Gala Sinha built a bank by and for rural women in India, and is now working with large financial institutions to provide products that help women entrepreneurs access funding. “We do a lot of customization of products because we don’t want to design a product that is designed for the ease of the banker; it should be designed for the ease of the client,” she emphasizes.

In our interviews with women entrepreneurs, some have expressed their difficulty with accessing finance when traditional key performance indicators may not apply. “Traditional business Key Performance Indicators (KPIs) need to be complemented with KPIs that can‘t necessarily be measured monetarily. For example, in my case, one KPI (which is also a Sustainable Development Goal) is a measure of the hectares of organic certified land. But that has no direct monetary KPI,” says Nathalie Aldana, the founder of Nathalie’s Direct Trade, which sells Colombian fruit products in Sweden.

Gender smart investing looks at the gender analysis throughout the supply chain, and should provide a space for multiple approaches, argues global gender smart investment expert Suzanne Biegel. “Traditional financing such as bank debt and venture capital (VC) is often the wrong fit for women entrepreneurs building inclusive gender-smart businesses. We need different flavours of capital.”

women at Mann Deshi Bank

Chetna Gala Sinha built a bank by and for rural women in India.

Invest in funds that invest in women

One way to scale impact is to invest in funds that invest in women, and women fund managers and women owned banks can address this issue. As Jessica Espinoza writes in her blog, “What we have learned on this journey is that one of the best ways to scale the impact of our capital is to invest in funds and intermediary platforms that in turn invest in women through gender-smart businesses.”

Adesuwa Okunbo Rhodes, the founder of Aruwa Capital, also argues that women capital allocators can help “create more tables” rather than just providing a seat at the table for women. “For me it is very simple, women entrepreneurs urgently need equal access to capital and the best way to get capital to women as quickly as possible is to invest in women that allocate capital,” she states.

female sales force of frontier Markets

Women need to create their own tables.

Identify key outcomes for women

New financing models can provide a space for de-risking, while also providing impact and funding women-focused businesses. For example, IIX’s Women’s Livelihood Bond series has proven its ability to reduce risk for investors, while using impact monitoring to carefully assess the impact on the ground. Robert Kraybill of IIX states, “Our approach specifically focuses on the evaluation of outcomes, meaning the evaluation of positive change to women’s lives.” For women entrepreneurs, finding the right kind of funding also comes down to seeking those investors that share their beliefs – those that believe in the same impact metrics and are committed to supporting women founders on their entrepreneurial journey.  

Many women founders we featured have also included an element of financial literacy and access to financial services to the women who play key roles in their business, whether as growers or part of a last-mile sales force. They have found that communication is key to making an impact where it matters. As Reese Fernandez-Ruiz, whose business Rags2Riches in the Philippines employs women artisans, notes, “There are so many things you can learn just by listening to the community artisans and really understanding where they come from and what they need for the future. More often than not, they know what they want. However, they don’t know how to get there because many tools and opportunities don’t reach them anymore.”

elderly Georgian woman looking out of a woman

New financing models can unlock opportunities for women.

Use storytelling to build the business case

Ms. Biegel also highlights the role of storytelling in helping women access financing and explain their business model. “It’s also worth noting the role of storytelling and communication in the growth of gender finance – we and many other ecosystem builders have done our bit to share success stories, solid data and compelling case studies, which all help to make the case for investing with a gender lens.”

MIT D-Lab and iBAN have teamed up to create the Global Scale Up X initiative, a new Instagram community for female entrepreneurs, providing a platform to empower women founders and to help them connect to others and scale up their businesses. This issue of CLUED-iN features a podcast by Susann Tischendorf with Jona Repishti and Amanda Epting, managers at MIT D-Lab, who explain why storytelling approaches like that of Global Scale Up X matter: They help bring to the forefront the reality of challenges women founders face and how this can impact their growth trajectory. “By highlighting success stories from around the world, we hope to showcase real role models that can inspire other female founders to follow in their footsteps,” said Amanda Epting. These authentic insights and shared experiences can help other female entrepreneurs learn how to find the right types of financing to reach their business goals.

African woman talking

Storytelling helps unlock finance for inclusive business.

Additional resources


Slider: © Mann Deshi Bank; © GIZ/Sven Schuppener; © GIZ/Martin Godau

Text body: © GIZ/Michael Tsegaye (Sudanese woman); © Mann Deshi Bank (crowd of women); © Frontier Markets (sales agents); © GIZ/Lisa Feldmann (African woman explaining); Unsplash / Pixabay (all other pictures)

Alexandra Harris

Alexandra Harris is a writer, editor and communications specialist with a focus on sustainable private sector development. She previously worked for the International Finance Corporation and the Asia Foundation.