Startup Street: Are Women-Founded Startups A Better Bet?
This week on Startup Street, we have a Boston Consulting Group’s study which shows that women-led startups may be a good bet for investors. Three things Prime Minister Narendra Modi said about startups in India. Five-year old smart electric scooter maker Ather Energy’s flagship product has finally hit the road and a startup backed by marquee investors like Hero Group’s Sunil Munjal and Nasscom’s Raman Roy grew 15 times in the last nine months.
Here’s what went on:
Women-Led Startups Get Less Funding, But Make More Money
Female entrepreneurs are likely to receive significantly less funds than their male counterparts—to be precise, a million dollars less on an average, according to a recent research report put out by Boston Consulting Group. Yet, the startups deliver higher revenue.
Businesses founded by women ultimately return more than twice as much per dollar invested compared with those founded by men, it said. That makes “women-owned companies better investment bets for financial backers”, according to BCG’s note on its website.
BCG partnered MassChallenge, a non-profit startup accelerator that has backed over 1,500 businesses, to determine the scope of the funding gap. They reviewed five years of investment and revenue data for the startups accelerated by MassChallenge.
Our objective was to see how companies founded by women differ from those founded by men. Our data shows a clear gender gap in new-business fundingBoston Consulting Group
Despite the funding disparity, women-founded startups delivered about 10 percent more in cumulative revenue over the five-year period, the note said. They were also more effective in turning a dollar of investment into a dollar of revenue.
“For every dollar of funding, these startups generated 78 cents, while the male-founded ones generated less than half that, just 31 cents,” BCG said.
BCG also recommended venture capitalists and accelerators not to be structurally biased while making funding decisions. “The investment gap is real—and larger than we thought—but there are ways to help close it.”
3 Things Modi Said About Startups, This Week
Prime Minister Narendra Modi addressed entrepreneurs from across the country, including Dehradun, Guwahati and Raipur, at an event in New Delhi to acknowledge their contribution and progress made by the startups in India. Here are the three key takeaways from his speech.
- Spreading Roots: “There was a time when startups meant only digital and tech innovation. Things are changing now, we are seeing startups in various fields such as agriculture,” Modi said. India’s agricultural sector employs around 50 percent of the country’s workforce and contributes 18 percent of the total gross domestic product, according to the India Economic Survey 2018. “We invite more youngsters to ideate on how to transform our agriculture sector,” the prime minister said.
- Growth Engine: Forty-four percent of all startups are now from Tier II and III cities, Modi said, highlighting how the government’s Startup India initiative penetrated deep into the country’s geographies. He urged entrepreneurs to invest more into startups, calling them the “growth engines” of the nation.
- Fund of Funds: The government has committed Rs 10,000 crore toward a Fund of Funds for startups. By the time the fund matures, Rs 1 lakh crore will be available to India’s startups, which are now mushrooming in smaller towns and also in unconventional segments like agriculture and social sectors, he said.
Ather Energy Rolls Out Its Electric Scooters, Finally
After four years of innovation, development and fine-tuning, the wait for the much-anticipated launch of Ather Energy’s electric scooters is finally over. The five-year old smart electric scooter maker has recently launched its flagship Ather 340 and its visually similar variant Ather 450.
Ather 450 has a range of 75 kilometers in a single charge with a top speed of 80 kilometers and hour. The vehicle can go from zero to 40 kilometers an hour in 3.9 seconds, the website says. The 340 variant has a range of 60 kilometers on a single charge with a top speed of 70 kilometers an hour.
While Ather 450 is priced at Rs 1,24,750 (on road), its 340 variant costs Rs 1,09,750 (on road). This is inclusive of a subsidy of Rs 22,000, goods and services tax, road tax, smart card fee, registration card and insurance, according to the startup’s statement.
The startup aims to sell 1 lakh units in the next three years and expects to earn a profit on every unit sold by then.
“We believe in the next three years we would be unit-level profitable and in about three to four years we would have an Ebitda-level profitability,” Tarun Mehta, founder and chief executive officer of Ather Energy, told BloombergQuint.
This Startup Has Grown 15 Times By Helping Kirana Shops
MaxWholesale has grown 15 times in the last nine months by solving a key problem for India’s infamous kirana stores—restocking.
The two-year old startup founded by Samarth Agarwal and Rohit Narang is providing technology and logistics solution for the mom-and-pop stores in New Delhi. The startup’s “data science-driven approach” helps these stores identify their future demand and avoid under or overstocking.
Available to only registered members which the startup vets itself, nearly 4,000 kirana stored in Delhi are now on its platform, MaxWholesale said in a statement. “The vision of MaxWholesale is to unite 1 million small kirana stores on a single digital platform.”
India has around 8 million mom-and-pop stores, which dominates the country’s grocery retailing with a 98 percent share, according to MaxWholesales. While the larger fast-moving consumer goods companies are promoting huge department stores and e-retailing in India, this startup is aiming to enable small businesses with an “equal playing field”.
MaxWholesale is backed by biggies such as Nasscom Chairman Raman Roy, Ambarish Raghuvanshi, Sunil Munjal of Hero Group and Bikky Khosla, among others, who have invested $1 million into the company so far.