The primary purpose of the research is to identify the challenges faced by Indian urban women micro-entrepreneurs in their entrepreneurial journey. The challenges presented by the external environment as well as the deficiencies inherent in their skill sets are analysed to ascertain the most important barriers that continue to impede their growth. Findings indicate that limited funding and balancing responsibilities are the two major challenges faced by women entrepreneurs (WEs); the former being most important for micro-entrepreneurs engaged in manufacturing, while the latter poses the biggest challenge for those engaged in the services sector. Regarding skills, findings indicate that WEs appear to be least skilled in performing finance and information technology-related roles. To the extent that perceived skill gaps and challenges faced are closely related, the findings of this research present an alternative interpretation of the primacy of funding constraints faced by WEs.