By Preethi Rao

Ease of Doing Business for MSMEs: Women entrepreneurs who are growth-oriented, aspirational, and who think beyond sustenance, require a robust support ecosystem to flourish. According to the International Finance Corporation (IFC), women-led businesses face a financing gap of nearly $320 billion in developing economies. Apart from financial constraints, women entrepreneurs also lack non-financial support such as networking opportunities, market access, skill enhancement, support for formalization and digitization, and so on, which may be required for growth.

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Globally, gender lens investing (GLI) is gaining momentum with a renewed focus on investing in women, especially as entrepreneurs. According to the survey undertaken by Morgan Stanley Institute for Sustainable Investing, 67 per cent of international investors have imbibed gender diversity in their investment portfolios. There are around 138 GLI-focused funds across the world, of which 14 percent are in South Asia (Wharton Social Impact Initiative). However, according to our research, in India only three commercial funds explicitly serve women entrepreneurs and for most impact investors gender outcomes remain incidental. The need is to bring them together for greater impact.

The multitude of solutions required to address the barriers and challenges that women entrepreneurs experience calls for a collaborative approach to philanthropy. An ecosystem approach, involving a variety of stakeholders including the government, private sector players, not-for-profit organisations, and foundations, is warranted as opposed to the existing siloed efforts to problem solving.

What competitive advantage do collaborative networks have in supporting women entrepreneurs?

●       Ability to deploy more resources towards addressing critical issues: As stakeholders focus on specific issues, such as increasing access to finance or markets for women entrepreneurs, there is a possibility to pool resources and collaboratively tackle a specific critical issue and achieve transformative change in the process.

●       Diversification of risk: As the views of the majority are embedded into the solutioning process, the risk of oversimplification or incorrect understanding of needs is reduced. When more voices are brought together, the atmosphere for critical thinking and analysis is enhanced.

●       Achieving multi-pronged impact/ scope for specialisation: Stakeholders bring different expertise and specialization to the table. NGOs may have localized knowledge of context/geography-specific issues that women entrepreneurs might face, and can work with funders or value chain partners to solve for them. This ensures that multiple avenues of addressing problems are analysed and actual solutions are conceptualised and implemented by experts who have experienced the outcomes in different settings.

●       Ensuring sustainability and collective action through convergence: A collaborative approach would ensure convergence among efforts in the space and enhance synergies. Associations and aggregators focusing on women entrepreneurs are already playing a key role in advocacy but can also bring other stakeholders such as donors, social sector organisations, fin-techs, ecommerce players along with government and allied agencies onto the same platform to ensure that solutions can not only be created and tested but also sustained and scaled.

A successful collaboration requires stakeholders to align on specific goals and impact indicators for investing in women’s entrepreneurial development. Aggregators such as AVPN and ANDE are most suited to anchor such platforms given their wide network of relevant stakeholders. AVPN’s Gender Lens Investing Fellowship encourages funders and philanthropists to apply a gender lens to advance investment outcomes across sectors. Similarly, ANDE, with support from USAID, launched the ANDE Gender Equality Initiative (AGEI) to promote intermediary organizations that provide a range of business development support services to women entrepreneurs in developing economies. G7 nations launched the 2X Challenge that encourages financial institutions and the broader private sector to invest in women. Co-impact, another collaborative that brings together philanthropies such as the Bill & Melinda Gates Foundation, The Rockefeller Foundation, Mackenzie Scott and others, deploys $1 billion to support predominantly women-led Global South organizations with unrestricted funding.

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While there are obvious advantages to addressing an issue as a collaborative, if not structured appropriately at inception, they can run the risk of diluting their mission or running into operational issues. A strong anchor partner with convening power can be critical for the success of such collaboratives. A successful collaboration can solve deep-rooted issues for the long term. As the adage goes – if you want to go fast, go alone; if you want to go far, go together.

Preethi Rao is Associate Director at Krea University’s research centre LEAD. Views expressed are the author’s own.