Bridging the Finance Gap for Women Entrepreneurs

11. Brazil: Policy insights on financing innovative women entrepreneurs

Professor Fernando Antonio Prado Gimenez
Federal University of Paraná

Background

Women are significantly under-represented in entrepreneurship compared to men. For example, about 23% of men are involved in starting or managing new businesses in 2022, whereas it was notably lower among women at 17% (Machado et al., 2023[1]). Similarly, 7% of women were reported managing an established businesses that was more than 42 months old, which was half of the rate by men (14%). Consequently, the overall disparity between involvement of men and women in entrepreneurial activities amounted to 13 percentage points (p.p.) with 37% of men and 24% of women participating.

There are notable differences in entrepreneurial motivations between women and men in Brazil. There is a higher prevalence of necessity-driven entrepreneurship among women entrepreneurs. In 2022, 54% of new businesses led by women were started because they had difficulties finding a job. Furthermore, the sectors dominated by women entrepreneurs exhibit lower diversity, primarily concentrated in catering (18%), retailing (11%), domestic services (8%), and hairdressers and other beauty care activities (7%) with limited technological sophistication and innovation. While men entrepreneurs in Brazil also demonstrate low levels of innovation with 79% indicating that their products/services lack innovation, women entrepreneurs are even less likely to innovate as 87% report that they do not (Machado et al., 2023[1]).

The low levels of innovation in Brazilian start-ups and early-stage businesses remains a persistent issue due to low levels of internationalisation, innovation in products and processes and the low presence of high-growth enterprises in the Brazilian entrepreneurial ecosystem (Inácio Júnior et al., 2016[2]). Moreover, recent survey evidence revealed that women founders represented only 20% of the 1 753 Brazilian innovative start-ups surveyed (Abstartups, 2024[3]).

Policy issue: Supporting innovative women entrepreneurs

In response to the prevailing gender disparities in entrepreneurship and calls for the enhancement and recalibration of women’s entrepreneurship policies by academic researchers (Foss et al., 2019[4]; Teixeira, Borges Júnior and Almeida, 2023[5]) – particularly towards technology-driven start-ups – Finep (Brazilian Innovation Agency) and the Ministry of Science, Technology, and Innovation (MCTI) initiated the “Programa Mulheres Inovadoras” (“Innovative Women Programme”). This programme aims to bolster start-ups led by women with the overarching objective of enhancing women’s representation in innovative sectors within the national entrepreneurial landscape. It includes acceleration programmes, tailored mentorship and opportunities for engagement with industry experts. In addition, it offers grants to support up to 30 women-led start-ups across Brazil with a maximum of six start-ups per region. Over the course of the programme’s first three editions, 82 start-ups underwent acceleration, collectively receiving over BRL 3.3 million (approximately USD 660 000) in grants.

As the programme embarks on its fourth edition, the call for proposals has outlined specific priorities, including health, information and communication, agriculture, energy, environmental sustainability, internet and AI, education and food production among others. The breadth of coverage in terms of technologies and thematic areas reflects a commendable commitment to addressing sustainability concerns and responding to competitive pressures, thereby aiming to position Brazil as a truly competitive and sustainable economy.

However, the programme is limited in terms of the number of start-ups it can accommodate, given the vast size of the country and its substantial entrepreneurial population. Thus, while the “Programa Mulheres Inovadoras” has made strides in addressing a crucial issue within the Brazilian entrepreneurial ecosystem and has generated meaningful albeit modest impacts, there remains ample room for expansion and enhancement of the support offer.

Despite these limitations, the programme has successfully fostered women-led technology-based entrepreneurship across all regions of Brazil. While there was some initial concentration in the South and Southeast regions during the inaugural edition in 2020 (21 start-ups), subsequent editions in 2021 and 2022 expanded to accommodate six start-ups from each of the five geographical regions. Notably, the third edition in 2022 saw the South region supporting seven start-ups, bringing the total to 31 start-ups supported across the country.

Conclusions

Women typically encounter more pronounced difficulties than men in the availability of financial resources for entrepreneurship in Brazil. This includes difficulties in accessing venture capital for business creation and in accessing growth finance. Women entrepreneurs can also face difficulties in accessing support from entrepreneurship support organisations in the Brazilian entrepreneurial ecosystem. Boosted policy initiatives in these areas can help respond to these issues.

References

[3] Abstartups (2024), Mapeamento do Ecossistema Brasileiro de Startups, https://abstartups.com.br/mapeamento-de-comunidades/ (accessed on 25 September 2024).

[4] Foss, L. et al. (2019), “Women’s entrepreneurship policy research: a 30-year review of the evidence”, Small Business Economics, Vol. 53/2, pp. 409-429, https://doi.org/10.1007/s11187-018-9993-8.

[2] Inácio Júnior, E. et al. (2016), “Analysis of the Brazilian Entrepreneurial Ecosystem”, Desenvolvimento em Questão, Vol. 14/37, p. 5, https://doi.org/10.21527/2237-6453.2016.37.5-36.

[1] Machado, J. et al. (2023), GEM: Empreendedorismo no Brasil 2022 Recorte Temático Sexo, ANEGEPE, São Paulo, https://datasebrae.com.br/wp-content/uploads/2023/11/GEM-2022-Recorte-Tematico-Sexo_FINAL.pdf (accessed on 25 September 2024).

[5] Teixeira, D., C. Borges Júnior and M. Almeida (2023), “The relationship between gender policies and the creation of businesses by women”, REGEPE Entrepreneurship and Small Business Journal, Vol. 12/3, https://doi.org/10.14211/regepe.esbj.e2438.