6 Questions with 6 Female Fintech Founders
By Marina Dimova (Director, Financial Industry & Network Advocacy) & Dan Truong (Marketing Specialist, Financial Industry & Network Advocacy)
Although women make up nearly 30% of the fintech workforce, they continue to earn only 2% of all venture capital, despite evidence indicating that companies with more women in leadership positions tend to perform better financially.
And so, to recognize the exceptional women in fintech who have overcome significant challenges to lead a digital financial services company, Women’s World Banking this year established the Female Founder’s Circle.
Designed to help female founders gain the exposure they deserve and elevate their profile on a much larger scale using Women’s World Banking’s platform, the Female Founder’s Circle community enables women founders to exchange ideas and experiences, helping them grow their organizations even further.
In this Q&A, our Female Founder’s Circle discuss their thoughts on driving the business case for serving the women’s market, building success pipelines for women in fintech, their vision for the future of the industry and so much more.
About the Female Founder’s Circle
All semifinalists of the 2023 Fintech Innovation Challenge (FIC) that were founded or co-founded by a woman were granted membership into this exclusive group. Of the 10 semifinalists this year, six fintechs joined our inaugural Female Founder’s Circle.
- Dr. Ethel Mupambwa: Founder & CEO of MoneyMart Finance.
- Martyna Malinowska: Co-Founder of GajiGesa (FIC Finalist – See Compete Live at the Summit in Mumbai).
- Neha Juneja: Co-Founder & CEO of IndiaP2P (FIC Finalist – See Compete Live at the Summit in Mumbai).
- Piya Bahadur: Founder & CEO of MeraBills (FIC Finalist – See Compete Live at the Summit in Mumbai).
- Shweta Aprameya: Founder of ARTH.
- Stella Lugalambi: Founder & Managing Director of HAMWE East Africa.
Financing
1. Studies conducted by organizations such as Crunchbase, All Raise, and the National Women’s Business Council show that only 2.2% of venture capital is directed towards female-led startups, despite evidence indicating that companies with a higher proportion of women in leadership positions tend to perform better financially. Why do you think this is, and how could we change that?
Piya Bahadur: There may be a combination of factors contributing to this situation. To begin with, only a minority of startups are female-led. Also, anecdotally, venture capital has been more responsive to a highly confident, aggressive style of pitching, and this puts male founders at an advantage.
To change the status quo, we may need to build a more robust pipeline of women leaders by creating greater opportunities for women at colleges, incubators, VC-meets and pitch events. Increasing awareness of success stories and providing greater access to women role models and mentors will also help.
Stella Lugalambi: Venture capital has its own standards and structure that don’t favor female-led startups. First and foremost, they require the percentage of women-owned shares in the company to be above 50%,[MD1][DT2][DT3] which is a really high percentage. Secondly, VCs require a minimum of USD 150,000 in revenue from the prior year, which again, is really high to get to as a startup.
I remember asking for USD 700,000 to help work with 200,000 last-mile women smallholder farmers, and I was turned down because venture capitalists wanted to work with startups that need a million and above. There is no venture capital that tries to innovate with existing women-led startups. I would like to challenge venture capitalists to innovate on supporting women-led startups.
Neha Juneja: Biases against women are common across various walks of life–the VC industry is no different. We’ve seen many programs that help women enhance their leadership & business skills and that’s great; we also need programs for leaders in VC who are gatekeepers to capital to help eliminate these biases which would unlock capital availability for women founders.
Shweta Aprameya: Globally and in India, participation of women in leadership roles, especially as entrepreneurs, is relatively new compared to male counterparts. Data like the above, therefore, lean more towards men than women and do not necessarily capture the recent changes. It is important to consider all the elements such as history of the business, life cycle of the business, etc., before making a decision.
Similarly, while I have no doubt that businesses run by women are also financially strong, I believe credit should be given to the business model rather than solely to the leader’s gender. Funding will follow where there is value being created. I strongly believe that in the next 5-6 years, the data on women-led businesses will reflect this belief.
2. Often fintechs who are under pressure from investors to reach scale think they cannot do so via the underserved women’s market. However, as Women’s World Banking’s CEO, Mary Ellen Iskenderian notes in There’s Nothing Micro About a Billion Women, if financial services were offered and promoted to women at the same rate that they are to men, there would be an additional $700 billion of annual revenue for the industry. As a female founder, what is your take on the business case for driving a greater focus on serving the women’s market?
Piya: The business case for focusing on the women-entrepreneur market is very clear – almost 20% of enterprises in the MSME sector in India are women-led, and this segment is one of the last few greenfield opportunities for fintechs in India and in the developing world. This alone is a reason to focus on the women’s market, but equally importantly, enabling this segment to build successful enterprises and provide employment to others is vital to the economy as a whole.
Neha: Our thesis is that the women’s market is actually the best market to extend credit to, i.e., women are our best capital growers. The efforts made and results shown by the microfinance movement validate this.
Shweta: Financial services for the underbanked, men or women, is a business that requires patience and will always have a slow(er) pace of growth than mainstream businesses. Most customers require handholding, training and a gradual breaking-in of product ice before they really start transacting on their own and adopting and using financial services in their daily lives. The growth in absolute business numbers, therefore, takes much longer. At the same time, loyalty of the segment towards a firm and the untapped market potential still makes it a viable business proposition.
My advice to all entrepreneurs operating in the segment is to choose the investor carefully. An investor should have a long-term view of your business and should also be culturally aligned to your vision of helping the underbanked.
Leadership
3. According to Findexable, women account for only 19% of executives, 11% of board members and 1.5% of founders. Congratulations on being part of the 1.5%! What do we need to do to build a larger pipeline for women leaders in fintech?
Piya: Measures to improve the participation of women in the startup ecosystem will doubtless also lead to an increase in the percentage of women leaders in fintech.
In addition, we believe that women-led fintechs bring to the table the gender intentionality at each stage of design required to make inroads into the women-led enterprise segment. This will incentivize organizations to hire and appoint [MD1] more women into leadership positions.
Stella: I would like to see a deliberate effort to include women at all levels of the decision-making process. We also need more funding targeted at women-led startups along with programs to support women founders with capacity building and strategy.
Neha: This relates in part to point one, we need to unlock more capital and opportunities for women-led or women-focused businesses. With enough opportunity available, there will be takers.
Shweta: Creating an unbiased and equal-opportunity environment at all levels of an organization is the best way to move forward and maintain a steady pipeline for women leaders. As a woman founder, I believe all women want to compete on merit and equal pay. An equal opportunity environment is most rewarding for women. It is also beneficial for the company as it creates a positive competitive environment.
Secondly, we need more ecosystems/networking platforms where women leaders can share, learn and brainstorm in a healthy and supportive environment. Unbiased opinions from industry seniors, for instance, can greatly benefit early-stage startups.
Finally, I believe that Women’s World Banking can play an important role in curating a channel for senior women mentors for women-led enterprises. While there are many women leaders who have been taking active steps in supporting women-led enterprises, it is limited to their immediate connections. A formalized channel will give access to many other deserving entrepreneurs from all walks of life.
4. In your opinion, what leadership traits are needed to succeed as a female leader in tech/fintech? What advice do you have for women who are looking to make it in fintech/inclusive fintech?
Piya: As a woman founder, I have realized that creating a successful business is, by and large, a long-term game – making it through lean phases, periods of self-doubt and sporadic crises is half the battle! Finding mentors, investors, employees and partners who believe in you and offer unstinting support is vital during the early years. I believe that women should think of creating more demand-led solutions that offer alternatives to the existing paradigms, rather than trying to only improve marginal efficiency and outreach for existing solutions.
Stella: Be focused on your vision, bootstrap for the first few years and don’t get derailed by stressful offers to rework your vision and approach to product delivery.
Neha: The fintech ecosystem is elaborate and advanced. My advice would be to engage with a variety of stakeholders right from the start.
Shweta: Working in the inclusive sector is a game of patience, slow growth and less commercially rewarding than many other businesses or financial services that exist today. It is driven often by a sense of social commitment.
One should consider building an inclusive fintech firm only if you are ready to not be a ‘soonicorn’ [companies that completed their last round of funding at a value of approximately $600-800 million, indicating their product is suitable for the market] in five years.
Products
5. Not only are women underrepresented at the executive level in fintech, but at the userbase level as well. While some progress has been made to close the financial access gap, 742 million women are still excluded due to a variety of complex factors, which translates to fewer products being designed for them. How can the industry at large build products and services that advance the ways in which women contribute to and access financial services?
Piya: At MeraBills, we have been very intentional about designing our products for women from the ground up – we are careful about not falling into the trap of “pinkwashing” existing solutions or expecting women to make behavioral changes to adapt to our product. For example, women’s phones are often also used by their children and protecting financial apps against accidental use by children may be key to the successful adoption of the app.
The motivations for using financial products and services are often quite different for women than men — saving for family events, children’s education, etc., and these differences will need to be factored into the product design.
Stella: Mainstream players need to take time to understand the dynamics of working with rural women in agriculture. For example, in Uganda, women market vendors need about 50 – 200 dollars a day to run their business. Loans for women businesses should offer weekly or seasonal loans and remodel repayment schedules to fit the cash flow of the business. Loans should not be granted based on audited books and business strategic plans.
Neha: An important step would be for financial services companies to start collecting and assessing gender-disaggregated data across staff and customers. Another step would be to evaluate inherent and developing biases in algorithms and business processes.
Shweta: One of the most effective ways we use at ARTH is to leverage grant capital partnerships. Fintech firms working towards financial inclusion have a much longer turnaround time as the process involves educating the customers about financial services, hand-holding them through the technology-led procedures, and so on. Grant money can go a long way in increasing the reach. Also, since the transaction value per customer is low, grant capital support can be very useful in building the base that is required.
Secondly, customers require multiple interventions customized to their needs. For instance, while a farmer may need bite-sized insurance and market linkages, a handicraft retailer may need training in bookkeeping. Large and well-networked associations such as the Rockefeller Foundation could play an active role in ensuring the right resources are available for women customers.
Lastly, providing ‘Failure capital’ is especially beneficial for nano-entrepreneurs. In our experience, nano-enterprises tend to use their savings as working capital. If a business fails, they lack emergency funds to get back to their income-generating activity. Lack of support at this stage leads to an economic setback and in many cases pushes women below the poverty line. A ‘failure capital’, a source of capital that gives them another chance, could help them resume economic activity and get them back on their feet.
6. In 10 years, what progress do you hope to see in the fintech industry? What types of innovations do you want to see in inclusive fintech?
Piya: We dream of an India where technology is helping every small businessperson derive a profitable and sustainable livelihood from their business. We hope that women-centric fintech solutions will enable the woman entrepreneur to not just be a recipient, but she can become a provider of financial services, a force multiplier–that gender-sensitive solutions empower successful businesswomen to mentor, invest in and contribute to the success of other local businesses.
Stella: Fintech serving the last mile with ease.
Neha: Finance plus tech is an all-important lever for economic and social progress. I hope to see more at-scale fintech solutions that enable livelihoods and income enhancement across low-income segments.
Shweta: In India, we clearly see fintech as being an integral part of the country’s overall growth story. Digital transactions across financial services have been at an all-time high in India. In the first quarter of 2023, India recorded a total of 23 billion transactions. The trend is only getting stronger with new digital rails being added regularly by the Government. For instance, the account aggregator system, the newest technology for financial data management, is likely to make data sharing as easy as sending an SMS.
Digital services have increased and will continue to provide greater access to finance for the 1 billion women who are still underbanked. This in turn will result in more people joining the fold of the formal economy leading to a snowball effect.
To support this high-impact growth, I do hope to see a lot more attention towards women nano-entrepreneurs because they are the real change makers.
Introducing the Fintech Diversity Scorecard
The Fintech Diversity Scorecard, powered by Women’s World Banking, Findexable and Money 20/20, evaluates the gender diversity of your staff and your company’s ability to attract, retain, promote, and reward talent inclusivity. This quick six-minute survey will immediately give you a free report that includes your high-level diversity score, benchmark against peers and recommendations for improvement.
