13 August 2018 | Report

Tailoring Finance for Women’s SMEs


The report, published by Investing in Women partners Ernst & Young, finds that women entrepreneurs are more likely to cite access to finance as a major constraint to developing their businesses than men. Provision of capital is fundamentally based on the perceived investment risk of a company, however social norms and unconscious biases can increase the real or perceived investment risk associated with women-owned SMEs.


Three of the key challenges women entrepreneur face in raising capital are:

  1. Unconscious investor bias: Investment strategies and screening criteria exhibit unconscious bias against women’s SMEs and can cause investors to inadvertently exclude women’s SMEs in certain sectors.
  2. Reduced available collateral: Limited land ownership among women makes it more difficult for women to provide collateral against debt. Even when women own property, they are often reluctant to use it as collateral due to the potential impact on the family if they were to lose it.
  3. Limited access to financial services: Banks can often require spousal consent to process transaction by women, including to obtain bank loans or even to open bank accounts.

Impact investors and impact funds actively invest in businesses seeking not only a financial but also a social or environmental return, yet to-date there has been little focus on women-led businesses. The report outlines the opportunities for impact investing to overcome the financing challenges faced by women’s SMEs and analyses the suitability of various financing structures to bridge the finance gap for women’s SMEs. These include:




  • Equity was generally identified by investors as the appropriate instrument for SMEs, given the perceived risk associated with the SMEs’ life stage and the higher-return profile an equity investment provides.
  • However, the same market study together with market feedback found that women’s SMEs are generally less likely to prefer equity because of equity and venture capital channels tending to be dominated by men, from decision makers through to distribution.


Mezzanine and Quasi-Equity:


  • Bridges the gap between equity and debt and may be attractive to women’s SMEs for a number for reasons including lower collateral requirements compared to debt and lower equity dilution compared to equity
  • Mezzanine instruments can also be attractive for investors as strategic instruments for new participants investing in women SMEs, with debt-like features that enable de-risking of investment alongside equity-like features capable of capturing upside potential.

There is an opportunity for impact investors to utilise a gender lens approach in their ongoing investment thesis to help strengthen the financial ecosystem for women in business, and in turn, act to spearhead the campaign for women’s economic empowerment.




  • Foreward
  • Introduction
  • Investing in Women
  • First Year progress
  • EY Advisory Role for IW
  • Gender Lens Investing
  • The Credit Gap
  • How IW Mobilises Capital towards Women’s SMEs
  • Investing in Women’s SMEs
  • Case Study: SEAF
    • Investment Strategy
  • Mobilising Tailored Investments Through a Gender Lens

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