This chapter presents key indicators on women’s entrepreneurship financing for OECD countries and beyond. It provides cross-country data on levels of entrepreneurship by women and men and the characteristics of the businesses they create and run. It offers data on the scale and gaps in women’s entrepreneurship financing and the barriers women face, with comparisons to men. It also provides a summary of key policy issues for women’s entrepreneurship financing drawing on literature and policy documents.
Bridging the Finance Gap for Women Entrepreneurs
Insights from Academic and Policy Research
Abstract
Although there has been much progress internationally in recent decades in reducing gender gaps in education and the labour market, there remains a sizeable gender gap in entrepreneurship. A key indicator is the share of women and men involved in working on a start-up or managing a new business that is less than 42 months old, i.e. early-stage entrepreneurship. During the period 2019-23, only about 7% of women across the OECD were involved in early-stage entrepreneurship relative to more than 9% of men (Figure 2.1).
Across countries, the rate of women in early-stage entrepreneurship varied from more than 15% of women in Colombia and 20% in Chile to only 2% in Poland, Italy and Japan. There are also cross-country differences in the size of the early-stage entrepreneurship gap between men and women. There was essentially no gender gap in Colombia, Poland and Spain, but the gap was relatively large in countries such as Türkiye, Estonia and Japan.
The gender gap in entrepreneurship has a cost for economies. If women participated in early-stage entrepreneurship at the same rate as 30-49 year old men, there would be an additional 24.8 million women entrepreneurs in OECD countries (OECD/European Commission, 2023[1]). The cost of these “missing” women entrepreneurs is significant. For example, estimates suggest that GBP 250 billion (EUR 286 billion) would have been added to the United Kingdom economy in 2017 – about 12% of GDP – if women started and scaled businesses at the same rate as men (Alison Rose, 2019[2]).
Share of population that is actively involved in starting or managing a new business (less than 42 months), 2019-23
Source: (GEM, 2024[3])
While the gender gap in entrepreneurship is long-standing, it has narrowed slightly over the past decade. There were about three women in early-stage entrepreneurship for every four men in the OECD area during the 2019-23 period. This had increased relative to the previous five-year period (2014-18), when there were about 2.7 women for every four men in early-stage entrepreneurship. Of the 34 countries where data are available, the ratio of women to men in early-stage entrepreneurship increased in 25 countries (Figure 2.2).
The reduction of the gender gap in early-stage entrepreneurship occurred despite the COVID-19 pandemic, which was disproportionately difficult for women entrepreneurs. International surveys show that women were about 40% more likely than men to report that they closed their business due to COVID-19 (OECD/European Commission, 2023[1]). This is largely explained by sector effects since the sectors impacted most strongly by lockdown measures (e.g. Personal services, Accommodation and food services, Arts and entertainment, and Retail trade) are those where women are over-represented in employment and entrepreneurship. However, another important issue was the greater likelihood that women took on more household and care responsibilities during the pandemic (e.g. homeschool, childcare), reducing time available to work on their business. This is underlined by the many national surveys and studies that demonstrate that women entrepreneurs were more likely to face reductions of workload and income during this period. For example, research in Germany shows that self-employed women were 33% more likely than self-employed men to experience income loss due to the COVID-19 pandemic (Graeber, Kritikos and Seebauer, 2021[4]).
While women’s entrepreneurship has since bounced back from the pandemic as economies re-opened, many other challenges have emerged including political uncertainty, international conflicts and the rising costs of living and operating a business. Nearly half of people working on new startups in OECD countries in 2022 reported that it was harder to launch a business than in the previous year and women were much more likely than men to report that it was harder to start a business in most countries (OECD/European Commission, 2023[1]). This is consistent with the research that suggests that the COVID-19 pandemic also weakened the women’s entrepreneurship support ecosystem (OECD, 2021[5]).
Ratio of women to men involved in early-stage entrepreneurship compared over time
Note: The Total Early-stage Entrepreneurship Activity (TEA) rate represents the proportion of the adult population (18-64 years old) that is actively involved in starting a business or the owner-operator of a business that is less than 42 months old.
Source: (GEM, 2024[3]).
There are also gender gaps with respect to the scale and nature of business activities operated by women and men. There is a substantial literature suggesting that women generally have different motivations in entrepreneurship. Some women start businesses as a way to have flexible work so that they can effectively manage their work-life balance and care responsibilities, whereas others are taking the opportunity to pursue a business idea, are trying to avoid the “glass ceiling” in employment, or may not be able to find a job (OECD/EU, 2016[6]; OECD, 2021[5]).
On balance, women entrepreneurs are slightly less likely than men entrepreneurs to report that they started their business to pursue an opportunity. During the period 2019-23, 78% of women in OECD countries reported pursuing an economic opportunity with their start-up relative to 82% of men (Figure 2.3). The gender gap in opportunity-driven entrepreneurship is smallest in the countries with the highest levels of opportunity-driven entrepreneurship, for example in Ireland, where women were more likely than men to report that they started a business to pursue an opportunity.
The gender gap in growth-oriented entrepreneurship is even larger. About 10% of early-stage women entrepreneurs in OECD countries reported between 2019 and 2023 that they expected their business to create at least 19 jobs over the next five years. This was well below the share of men during this period (17%) (Figure 2.4).
Share of early-stage entrepreneurship that is opportunity-driven, 2019-23
Note: Early-stage entrepreneurship refers to the TEA rate (see the note below Figure 2). This figure presents the share of entrepreneurs working on new start-ups that are pursuing a market opportunity as opposed to starting a business because they could not find a job.
Source: (GEM, 2024[3]).
Growth-oriented early-stage entrepreneurship, 2019-23
Note: Early-stage entrepreneurship refers to the TEA rate (see the note below Figure 2). This figure presents the share of entrepreneurs working on new start-ups that report that they expect to create at least 19 jobs over the next five years.
Source: (GEM, 2024[3]).
Overall, women are held back in entrepreneurship relative to men by a range of obstacles. These barriers affect not only decisions related to starting a business but also the growth and development of the business. Barriers include greater difficulties accessing resources, on average, due to smaller and less effective entrepreneurship networks (OECD/EU, 2015[7]) and lower levels of entrepreneurship skills. For example, women are about 75% as likely as men to report that they have the skills needed to start a business, reflecting skills gaps as well as differences in self-confidence (OECD/European Commission, 2023[1]).
Women face greater challenges than men in accessing finance for entrepreneurship on average. Most of the evidence focuses on access to external funding, coming from bank funding, private investment (including venture capital) and government funding programmes.
Both survey and transaction data consistently show women are less likely than men to report that they can access external finance to start a business (OECD/EU, 2016[6]). For example, men are nearly twice as likely as women to report that they had borrowed funds from a bank to start, operate or expand a business (Figure 2.5). This is observed in virtually all OECD countries and was highlighted in the previous Entrepreneurship Policies through a Gender Lens report as one of the main challenges currently faced by women entrepreneurs around the world (OECD, 2021[5]). Another example is that women-owned micro-enterprises in Latin America and the Caribbean receive USD 5 billion less in financing than those owned by men and this gap grows to USD 93 billion when all SMEs are considered (UN Women, 2021[8]). Globally, closing these financing gaps could create USD 5-6 trillion in potential net value addition worldwide (Women Entrepreneurs Finance Initiative, 2022[9]).
Share of entrepreneurs who borrowed to start, operate, or expand a farm or business, 15+ years old, 2017
Source: (World Bank Group, 2024[10]).
It should be recognised that entrepreneurs can use their own resources rather than external finance for starting businesses when it is available to them. Entrepreneurs often tap into the “3 F’s” – founder, family and friends (OECD/EU, 2022[11]). Overall, indeed, external funding is used by only around one quarter of entrepreneurs and this will complement the use of the entrepreneur’s own funds plus the funding they can raise from family and friends. Thus data from the Global Entrepreneurship Monitor show that more than 90% of entrepreneurs in virtually all OECD countries invest their own money in their start-up, about 30% receive funds from family and another 20%-25% from friends (Daniels, Herrington and Kew, 2016[12]). Yet, reliance on the 3 F’s can be problematic for women entrepreneurs, firstly because they may have access to more limited resources from this source relative to men, and secondly because developing more growth-oriented businesses is often likely to require levels of resources that can only be met with contributions from external sources.
The gender gap in entrepreneurship financing goes beyond the likelihood of accessing funding. When women entrepreneurs receive funding, they typically receive less funding than men and under worse conditions. For example, women typically pay higher interest rates and are required to provide more collateral when they receive loans (Lassébie et al., 2019[13]; Thébaud and Sharkey, 2016[14]). In Honduras, for example, women borrowers consistently pay an average rate 5.8% higher for business loans and 2.6% higher for microcredit than men, while in Chile, women access consumer loans at interest rates that are 15% higher than men, with average loan sizes that are 32% lower (Superintendencia de Bancos e Instituciones Financieras, 2014[15]).
The financing gap is also a result of women entrepreneurs seeking and securing smaller loans compared to men (Sena, Scott and Roper, 2010[16]). For example, in the United Kingdom a 2023 report found that while there were no significant differences in the loan approval rate by banks between businesses led by women and men, the average loan size approved for women-led businesses was almost half that of men-led businesses (GBP 51 300 compared with GBP 107 300) (British Business Bank et al., 2023[17]). This is in part explained by sectoral and size differences in the businesses involved, but also by the fact that women often tend to request lower loan amounts for similar businesses.
The gender gap in external finance is particularly noticeable among growth-oriented businesses, notably in STEM sectors (i.e. science, technology, engineering and mathematics), where venture capital is often an important component of business financing. Women entrepreneurs are strongly under-represented in access to equity finance (OECD, 2021[5]). For example, businesses owned or led by women have been estimated to receive only about 2% of total venture capitalist investments and women entrepreneurs who acquire venture capital investment to receive only about 70% of the funding amounts of men (Lassébie et al., 2019[18]; Teare, 2020[19]).
A consequence of these financing gaps for women entrepreneurs is that women entrepreneurs can be less likely to seek investments or loans because they believe that they will not be successful (OECD/The European Commission, 2013[20]). This phenomenon of “discouraged borrowers”, i.e. firms that require finance but do not to apply for a bank loan because, correctly or not, they believe that their application will be rejected, tends to be prevalent among groups who are under-represented in the entrepreneurial population such as women, youth and migrants (OECD/European Commission, 2021[21]). Negative perceptions about loan applications, funding amounts and conditions can create unfavourable attitudes towards external finance that restrict the growth potential of women-led businesses (Naegels, Mori and D’Espallier, 2022[22]; Kilincarslan and Li, 2024[23]).
Many studies have investigated the factors leading to the gender gap in access to finance for entrepreneurship. They highlight barriers on both the supply and demand sides of the finance market. An overview is provided in Table 2.1.
Supply-side issues are structural problems in the market that reduce the supply of or increase the cost of financing for women entrepreneurs. One of the key issues can be a misalignment of financial products and services with the needs of typical women-led businesses (OECD/EU, 2016[6]). For example, standard loan sizes offered may be too large, payback times may be too short, preferred business sectors for investors may not be the ones most favoured by women entrepreneurs, collateral and guarantees for loans may be over-emphasised etc. It is important to collect and assess data on the amounts and types of external financing used by women and men entrepreneurs to see these differences in preferences and the potential gaps engendered. Indeed, banks and financial ecosystem stakeholders are starting to collect more data on demand and use of financial products by gender, and from the collection of these data, many banks have identified an untapped opportunity to develop targeted services for women. For example, a regional analysis of five Latin American countries estimated that developing targeted services for women-owned or -led MSMEs would bring around USD 10 million of additional profit for one bank alone (Financial Alliance for Women and Data2x, 2023[24]). Lack of adequate financial products also impacts on business growth and ability to receive future finance (Financial Alliance for Women and Data2x, 2023[24]).
Another issue that may arise is discrimination. When considering loan approvals, there is potential discrimination of two kinds: prejudicial and statistical (Moro, Wisniewski and Mantovani, 2017[25]; EIF, 2023[26]). Prejudicial discrimination is based on personal preferences rather than objective criteria when making judgments about individuals (Becker, 1971[27]). This includes for example, gender stereotyping in lending and investment processes (Brock and De Haas, 2023[28]; Malmström and Wincent, 2018[29]). Lenders and investors may also have erroneous perceptions of differences between men and women in terms of commercial abilities (World Bank, 2015[30]). This type of discrimination may partly arise from the small number of women involved in lending and investment decisions. For example, in the United States, women account for only 19.5% of angel investors, although they represent nearly 40% of the top wealth holders (Sohl, 2017[31]). In these cases, judgements may be influenced by the biases of the loan officer, driven by the goal of reducing costs or maximising profit (Muravyev, Talavera and Schäfer, 2009[32]; EIF, 2023[26]). The other type of discrimination is statistical discrimination, which involves potential gender biases in the selection and use of objective measures in credit scoring and risk assessment models, which may systematically discriminate against the types of enterprises or entrepreneur characteristics more typical of women.
Levels of risk for lenders and investors are generally high and hard to assess in the field of new business financing. Lenders often use credit history information to assess the creditworthiness of borrowers. However, this can be lacking for new entrepreneurs, particularly for new women entrepreneurs, who may have less engagement with traditional business credit. Lenders can respond to a lack of credit history information by requesting collateral or by putting up interest rates. However, putting up interest rates itself constrains credit and puts off borrowers. It can also bias the credit institution’s lending portfolio towards riskier products. Therefore, taking collateral is often favoured, particularly in the form of immovable property, such as business premises or the owner’s residence. Finding collateral however can be a particular problem for women, since women often have lower available assets that men to offer as collateral, including more limited access to, or control over property (Pailhé, 2018[33]). Lack of collateral has been reported as the third most common barrier for women entrepreneurs to access credit, just after low business skills and lack of awareness of financial products (Alliance for Financial Inclusion, 2021[34]). To address this challenge, microfinance institutions, therefore, tend to use cash-flow based lending1 and co-guarantors rather than collateral.
On the demand side of the market, issues can include the entrepreneurial skills and experience of women entrepreneurs and their entrepreneur profiles. Evidence of gender differences in entrepreneurship skills and knowledge, including business financial literacy, is presented in (OECD/EU, 2022[11]). Lower financial skills can affect the ability of the entrepreneur to identify funding opportunities and lead to selecting products that may not be adapted to the use. According to the Financial Alliance for Women, women tend to finance business operations with retail banking (such as credit cards) rather than corporate products, which result in them paying more to get finance and having less capital available (Financial Alliance for Women, 2023[35]).2 Differences in the entrepreneurial profile of women and men also play a part in greater difficulties for women in obtaining entrepreneurial financing. This may include level of education, business management experience, and requested loan size, which may all affect the volumes of finance or terms offered, e.g. the interest rate charged or the amount of collateral demanded.
The typical size and sector of women owned enterprises is a related issue. Although in principle finance markets can adapt to differences in the features of businesses demanding finance, differences in the nature of the businesses run by women and men may help explain differences in the volumes of finance offered or their terms. For example, women entrepreneurs are disproportionately concentrated in highly competitive services sectors. Also, on average, they operate smaller businesses than men and have lower growth ambitions (OECD/European Commission, 2023[1]). Furthermore, in emerging economies, research indicates that women tend be over-represented in low-productivity sectors, which can impact on loan terms (Sabarwal and Terrell, 2009[36]). As women-owned businesses often generate lower returns than men-owned businesses, women entrepreneurs may be required to provide more collateral or a higher share of collateral compared to men entrepreneurs. Empirical studies in Italy show that women tend to be requested to provide collateral more often than men when applying for a loan (Cowling, Marlow and Liu, 2020[37]; Calcagnini, Giombini and Lenti, 2015[38]).
Another important demand-side barrier to women entrepreneurs’ access to finance is their behavioural tendencies towards external finance. Research indicates that women are, on average, more risk averse than men (OECD/EU, 2016[6]), which can hold them back from applying for external finance. Survey data from Europe show that women entrepreneurs prefer to self-finance their businesses rather than rely on external sources of finance, even when aware of the opportunities to secure external funding (ECB, 2020[39]). Women also tend to apply for loans less often than men because they are more likely to expect the loan application to be rejected (Cavalluzzo, Cavalluzzo and Wolken, 2002[40]).
There are several clear rationales for governments to intervene in financial markets to improve financing for women entrepreneurs. These include the economic efficiency benefits of addressing the market and institutional failures behind the barriers discussed above and the positive spillovers generated by increased entrepreneurship activity in terms of growth, job creation and innovation. For example, there is evidence that innovation is typically improved by greater diversity of those involved in the innovation process (Janjuha-Jivraj, 2021[41]). Another key rationale for policy intervention is promoting equal opportunities and social objectives such as reduced poverty.
Policy measures to reduce supply-side barriers may include encouraging more women in leadership positions within the financial ecosystem, promoting alternative sources of collateral, reducing risk in the market through targeted government guarantees, promoting the collection of gender-disaggregated data by financial service providers to inform the design and delivery of financial products, and providing technical assistance and capacity building to financial institutions to understand the specific needs of women entrepreneurs. These supply-side measures aim at reducing discrimination and gender bias as well as reducing information asymmetries.
Measures can also be taken on the demand side. These include promoting the development of entrepreneurship skills to help women sustainably grow their business, identify adequate funding opportunities, and increase their eligibility for financial services. Other measures include the provision of non-financial support to raise knowledge and awareness about the broad range of financial instruments available (e.g. leasing, factoring, equity finance) and the specific requirements needed to obtain them. In addition, helping women entrepreneurs to network and connect with the range of stakeholders of the financial ecosystem, such as accountants, development banks, investors, crowdfunding platforms and industry associations, can also foster demand from women entrepreneurs for the most appropriate sources of finance for their businesses.
Governments have been working on many levels to support women’s access to entrepreneurship finance. Some examples of recent developments in OECD countries are described in Box and potential actions are outlined in Table 2.2.
Many measures and schemes work on multiple levels. Overall, most public measures fall into five categories: raising awareness about different types of finance and the requirements of each; facilitating the matching of sources of finance and entrepreneurs; developing an appropriate regulatory environment that balances investor and consumer protection; reducing risk in the market through guarantees; and supporting the creation and development of new marketplaces. In addition, governments commonly directly offer financial support to entrepreneurs in the form of grants and loans. There are also a growing number of public equity programmes for women entrepreneurs, as highlighted by a recent OECD study Benchmarking Government Support for Venture Capital: A comparative analysis (OECD, 2025[42]). This includes venture capital funds or funds-of-funds targeting women entrepreneurs and dedicated envelopes for funds-of-funds investments into women-led venture funds (EIB, 2020[43]). These funds typically target early-stage businesses, supplying women entrepreneurs with the capital required for growth (OECD, 2024[44]).
Thrive Platform for Women, Canada
Building on the success of its Women in Technology Venture Fund, the Development Bank of Canada (BDC) Capital launched a new investment initiative in 2022 called the Thrive Platform for Women. This encompasses three initiatives: i) Thrive Venture Fund - a CAD 300 million direct investment fund targeted to women-led Canadian technology companies at seed and Series A/B stages; ii) Thrive Lab for Women – a CAD 100 million equity investment model for early-stage women-led companies; and iii) Indirect Investment Envelope – a CAD 100 million investment envelope managed by the BDC Capital’s Fund Investment team and directed towards women-led and focused general partners. Together the Platform’s three initiatives have been tailored to address the needs of women entrepreneurs, foster more diversity in the entrepreneurial ecosystem, and accelerate the growth of women-led businesses of all sizes.
She Invest Programme, Colombia
In Colombia, the Free and Productive Women Fund (Fondo Mujer Libre y Productiva) launched the She Invest (Ella Invierte) programme in September 2024 to promote female investment and entrepreneurship. The programme aims to transform the financial ecosystem by offering tools and valuable connections to women investors and women-led businesseswomen. The programme has three main components: i) Strengthening the autonomy of women investors through mentorship and financial preparedness to enhance their businesses, with a focus on impact investments in women-led businesses; ii) connecting women entrepreneurs with investors. Eligibility includes investment experience for investors and for women-led businesses, at least one year of operation and a minimum viable product. The program also develops loan guarantee funds and provides alternative sources of finance targeting women entrepreneurs, as follows:
Establishing incentives for good repayment behaviour, such as capital relief or interest rate reductions for women entrepreneurs with a positive repayment track record.
Promoting access to inclusive insurance products that protect women's income and productive assets in agriculture, commerce, and other economic activities.
In Colombia, the Free and Productive Women Fund (Fondo Mujer Libre y Productiva) has advanced these objectives by promoting financial inclusion mechanisms for women, strengthening access to credit, supporting impact investment initiatives, and developing tools to safeguard women’s economic autonomy in rural areas.
Emprendedoras Digitales Programme, Spain
In Spain, the Emprendedoras Digitales programme was launched in 2021 and is administered by the national innovation agency, ENISA (Empresa Nacional de Innovación). The programme seeks to close the gender gap in accessing financing for digital business startups. It offers participative loans without the need for collateral to women entrepreneurs, supporting the consolidation, growth and internationalisation of their businesses.
A number of international guidance documents are available to support the introduction and implementation of this policy agenda, for example from the European Union, World Bank, G20, and G7. Importantly, the OECD Council has issued three Recommendations that point the way on strengthening policy to support women entrepreneurs and each include actions to facilitate access to finance (Box 2.2).
The OECD Council adopts Recommendations that represent a political commitment by all the OECD countries, as well as by those non-OECD countries that voluntarily adhere to their implementation. There are three Recommendations with particular relevance to strengthening finance for women entrepreneurs.
Recommendation of the Council on Gender Equality in Education, Employment and Entrepreneurship
The Recommendation was adopted in 2013 on the proposal of the Employment, Labour and Social Affairs Committee in consultation with other OECD Committees. The Recommendation aims to promote gender equality in education and family-friendly policies and working conditions that enable mothers and fathers to balance their working hours and their family responsibilities with the aim of facilitating more women’s participation in private and public sector employment, including in entrepreneurship. Through a whole-of-government approach, the Recommendation supports the design and implementation of appropriate legislation, policies, monitoring and public awareness campaigns to promote the adoption of gender equality across education, employment and entrepreneurship. The Recommendation promotes actions to reduce the gender gap in entrepreneurship; consider the special needs of women from disadvantaged minority groups, notably migrant women; increase the representation of women in decision-making positions; eliminate the persistent and discriminatory gender wage gap; and promote all appropriate measures to end sexual harassment in the workplace. The implementation of the OECD “Gender Recommendation” has been monitored and reported to the Council in 2017 and 2022.
Recommendation of the Council on SME and Entrepreneurship Policy
This Recommendation was adopted in 2022 on the proposal of the Committee on SMEs and Entrepreneurship. It aims to provide an evidence-based and holistic framework to support countries in developing coherent, effective and efficient SME and entrepreneurship policies to foster their contribution to inclusive and sustainable growth through three pillars: i) policy co-ordination and governance; ii) transitions and resilience; and iii) access to resources. The Recommendation underlines the need to consider the diversity of entrepreneurs in government policies with appropriately tailored policy supports, including actions for women.
Recommendation of the Council on SME Financing
The Recommendation on SME Financing was adopted in 2023 on the proposal of the Committee on SMEs and Entrepreneurship. The aim of the Recommendation is to enhance SME access to a diverse range of financing instruments ─ traditional bank financing as well as non-bank finance. It also promotes the development of coherent national SME financing strategies that define specific policy objectives, design and implement policy measures, strengthen the evidence base, and provide a framework for monitoring and evaluation. To support and guide countries in achieving these objectives, the Recommendation sets out 14 policy recommendations. The Recommendation stresses the importance of developing a range of financing to match with the needs of diverse entrepreneurs.
Traditional policy instruments for strengthening access to finance for women entrepreneurs include grants, loans, loan guarantees, and investor readiness training (OECD/The European Commission, 2013[20]), but governments’ toolkits are growing. This is illustrated by the policy measures discussed in the collection of policy insight notes set out in Part 2 of this publication for 29 economies. We discuss below some of the main priorities for policy and some of the ways in which they come out in the policy insights notes presented later in the report. Each of these areas is then discussed in more detail in separate sections below, before Part 2 presents the international policy insight notes country by country.
Fostering conducive cultural attitudes
Cultural and social norms related to work and risk can hinder (or enable) women’s entrepreneurship. In several countries social norms related to entrepreneurship by women are a strong barrier to entrepreneurship by some women. Attitudes to entrepreneurship in society can affect women’s decisions to consider pursuing entrepreneurship when it is considered to be a “male” activity. In addition, gender norms can make it more difficult for women to access the necessary resources for business creation and development because capital may be directed towards men who may be perceived to be more likely to successfully start a profitable business. Several policy notes in Part 2 of this report explore these issues across highly different contexts: China, Czechia, Iran, Malaysia and Uganda. Governments in these countries have taken different approaches to shifting cultural attitudes and social norms, including in the areas of unpaid work, property ownership, and portraying women as successful entrepreneurs.
Boosting financial literacy among women entrepreneurs
Financial literacy can be a key determinant in accessing finance for entrepreneurship. It can help entrepreneurs identify potential sources of funding and help them understand financial products, services and terms and conditions so that they can align them with their business needs. On average, women entrepreneurs tend to be less likely than men to report that they have the financial knowledge and financial management experience needed for entrepreneurship, and the gap appears to be larger when it comes to digital financial products and services. Policy insight notes in Part 2 show that governments are increasingly investing in financial literacy programmes for women entrepreneurs. The policy insight notes covering Canada, India and Mexico underline the strong need for collaboration with the private sector. More is also needed to integrate business financial literacy into education and to embed more financial literacy training in women’s entrepreneurship programmes.
Strengthening microfinance
Microfinance has emerged as an important tool to offer small loans to segments of the population that have difficulties accessing mainstream banking services. While these microcredits can be used for personal use, they are also commonly used for business start-ups. When these small loans of up to EUR 50 000 are used by entrepreneurs, they are typically delivered in tandem with non-financial services such as training and coaching. These products are – in principle – used to help “unbankable” clients build a credit history so that they can access mainstream financial products, but the evidence of the effectiveness of microfinance for entrepreneurship is mixed. Many clients continue to face stigmas from mainstream financial institutions and microfinance institutions often use government guarantees and interest rate subsidies to manage their risk. The policy insight notes in Part 2 highlight both supply-side and demand-side issues, covering Tanzania and Sri Lanka. They underline the need to have adequate oversight and monitoring systems and that there is still a need to use targeted interventions to improve access to available funds for women entrepreneurs.
Improving access to angel investments
Angel investors typically invest between EUR 25 000 and EUR 500 000 in businesses in exchange for equity shares. These types of investments are becoming more structured as angel investors now commonly work in networks, clubs and syndicates and often scale-up investments in start-ups by pooling funds from many investors. Research suggests that the angel market is growing globally and some estimate that it could account for as much as 90% of all early-stage financing. This is a pertinent source of funding for women entrepreneurs because they, on average, are more likely to access funds through family and friends and place a higher value on trust-based relationships. However, women face many of the common finance challenges in this market, including for example investor homophily (investing in similar people and projects to yourself) and a low representation of women in angel investor networks. The policy insight notes in Part 2 show how angel networks in Poland and Wales (United Kingdom), are using partnerships to amplify investments in women entrepreneurs. The notes underline the need to encourage more women to become angel investors, including successful women entrepreneurs who can invest in others. Governments could also do more to support the development and growth of angel investor networks and could consider matching funds to co-invest to increase the amount of funds available.
Investing in high-potential women entrepreneurs
Scaleups attract a lot of policy attention because they are responsible for a disproportionate share of job creation and contribute to innovation and increasing competitiveness. Women are under-represented among growth-oriented entrepreneurs partly due, on average, to different ambitions. Even among highly qualified women entrepreneurs with high-potential business ideas, there are disproportionate barriers that hinder their access to finance. Many of these issues arise from different types of unconscious bias from investors. This results in women receiving less risk capital and also reduces their opportunities to learn from experienced investors and managers, further reducing the potential impact of their business. Part 2 of this report includes eight policy insight notes to present different approaches to supporting innovative and high-potential women entrepreneurs in Australia, Brazil, Finland, France, Italy, New Zealand, Nigeria and the United States. The notes highlight the need to do more to strengthen the pipeline of women entrepreneurs with growth aspirations by addressing gender gaps in STEM fields in education. A greater use of role models could help. There is also a strong need to address the supply-side of the market through training on avoiding gender bias and providing incentives for more women to be in investment decision making.
Ensuring a level playing field in financial markets
Digital innovations in finance have improved efficiency, reduced transaction costs and made markets more accessible, transparent and secure. This has led to new products, services, marketplaces and actors emerging, increasing the supply of finance for entrepreneurs. Although limited, research to date suggests that women entrepreneurs are benefitting from new marketplaces such as crowdfunding platforms. Therefore, it could be considered that Fintech holds potential for improving access to finance for women entrepreneurs. Yet at the same time there are risks that an increased reliance on algorithms in financial decision making could increase financial exclusion because they may be embedded with gender biases and may favour high-profit projects, which puts women entrepreneurs at a disadvantage because they are more likely to operate smaller projects. This is illustrated with policy insight notes in Part 2 covering Scotland (United Kingdom), South Africa and Spain. The notes confirm the potential of fintech for improving access to finance for women entrepreneurs but underline that several conditions need to be met. These include having appropriate regulatory frameworks in place, increasing the availability of financial literacy training and working with the private sector to reduce potential gender biases in new products, services and markets.
Ensuring programmes are fit for purpose, including by collecting more data
There has been a proliferation of entrepreneurship support initiatives for women entrepreneurs; however, many do not target sufficiently the specific challenges faced. Governments have introduced a range of measures and schemes to provide grants, loans and equity investments in some cases. However, these interventions have not sufficiently considered structural barriers that restrict access to finance for women entrepreneurs, including societal expectations, cultural norms, limited legitimacy and access to social and financial resources. There is, therefore, a need for broader efforts, including the collection of more data to better understand market dynamics and better-target policies and schemes. International collaborations are ongoing, including the new Women Entrepreneurs Finance Code (WE Finance Code) (Box 2.3) that aims to collect gender-disaggregated data both at the national level through public national authorities and at more granular level through private financial institutions. The policy insight notes in Part 2 show policy and programme design challenges in a range of contexts, covering Ireland, Kazakhstan, Northern Ireland (United Kingdom), Slovenia, Sweden and the United Kingdom. The notes show that dedicated schemes and initiatives may need adjustments in order to better address the gender gap in access to finance if structural barriers are not addressed. Moreover, there is a need to engage a wide range of stakeholders to reduce structural barriers, including increasing engagement with women’s business associations and networks and private sector financial institutions.
The Women Entrepreneurs Finance Code is a global multi-stakeholder effort for systemic change to eliminate barriers in access to finance for women entrepreneurs. The WE Finance Code was launched in October 2023 and is managed by the World Bank, who co-ordinates the Code with its global partners, including the OECD and the Financial Alliance for Women. Additionally, a Global Advisory Group advises on its implementation and governance. The OECD acts as the global data aggregator for the Code.
The Code seeks to expand the quality and quantity of data on women-led firms’ financing across a larger group of countries, following the example set in the Investing in Women Code in the United Kingdom. It is a commitment by financial service providers, regulators, development banks and other financial institutions to work together to increase funding for women-led businesses, particularly micro, small and medium-sized enterprises. Signatory financial institutions commit to:
Designating a member of the senior management team to be responsible for supporting the organisations’ efforts to support women-led businesses;
Expanding and introducing new measures that will support women entrepreneurs; and
Monitoring and reporting annually a commonly agreed set of indicators on the level of financing provided to women-led businesses.
29 countries have committed to the Code: Albania, Bosnia and Herzegovina, Côte d’Ivoire, Dominican Republic, Egypt, Fiji, Georgia, Indonesia, Jordan, Kazakhstan, Kosovo*, Kyrgyz Republic, Madagascar, Mongolia, Morocco, Montenegro, Mozambique, the Netherlands, Nigeria, North Macedonia, Pakistan, Rwanda, Senegal, Serbia, Somalia, Sri Lanka, Tajikistan and Uzbekistan. As part of the pilot phase, the WE Finance Code is being adapted to local contexts to ensure relevancy and uptake of the Code. Local co-ordinators of the Code are establishing definitions for women-led micro, small and medium-sized enterprises based on the Guidelines of the Code, to be used in the data collection and reporting. The first full data reporting cycle will take place in 2026.
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← 1. It is important to note that cashflow-based lending is however not often used by banks as they either do not trust cashflow statements or have experienced cases of fraudulent statements or fake supplier contracts.
← 2. As many women-led MSMEs are hidden in the retail portfolio, this has also acted as a barrier for financial institutions to understand women entrepreneurs as clients and offer products that meet their needs.