Investors still favor male startup founders in Africa by a wide margin


On a day of African tech funding milestones, two startups founded by women announced on Oct. 7 that they had each raised at least $2 million from venture capitalists.

Nigeria-based Klasha runs a checkout system that online stores like ASOS can integrate to receive payments in local currencies from African shoppers, while Ejara is a Cameroonian retail investment platform for cryptocurrencies. Both join an impressive cohort of female-founded African fintech companies that have raised at least $1 million this year.

Some of these companies’ founders are among the most innovative African minds of 2021. But their companies remain outliers in a male-dominated funding environment, as new research by Briter Bridges, and the World Bank’s Africa Gender Innovation Lab suggests.

Female-led startups are a fraction of a thousand

The report looked at 1,112 companies operating in Africa that have received venture capital funding between 2013 and May of this year. These companies raised $1.7 billion across 1,585 deals that were less than $20 million per deal. This benchmark was used because the report focused on early-stage funding in Africa.

Briter’s analysis found that 75% of the 1,112 companies had all-male teams, 9% all-female teams, and 14% had a mix of male and female founders. Just 3% of the $1.7 billion went to all-female founding teams, with 76% channeled to all-male teams.

One inference here is that even with an already small share of the number of companies being funded, female-led startups are not getting a proportional share of available funding.

It might be tempting to say that this gap is skewed by the relatively darker ages of the past decade, but the trend is current as of last year. According to Briter Bridges and the World Bank, 84% of funding in 2020 still went to all-male founding teams against 3% to all-female ones, with mixed teams getting 13%.

As with the overall trend, only 3% of early-stage funding to fintech—the continent’s most funded sector—goes to all-female startup teams.

What is to blame?

Jihan Abass, founder and CEO of Kenyan insurtech company Lami, told the report’s authors that “the lack of female founders is partially driven by the fact there aren’t that many women in the finance and technology space in general.”

She sees potential solutions in encouraging more girls to choose careers in science, technology, engineering and math (STEM), and in presenting entrepreneurship to girls as viable career paths. Both actions could help increase the presence of women at companies who can then go on to found startups. These are important because women-led companies tend to hire more women in staff and management roles, as the report suggests.

A pipeline problem may not be the only explanation for the low share of total venture capital funding going to women-led startups.

The report cites a “confidence gap” between female and male founders, where the latter are supposedly not as confident in pitching investors and in expecting their companies to be profitable in the long-term. But this might be a symptom of another cause, or the product of biased investors who tend to associate traits for successful entrepreneurship with men rather than women. Sometimes, this leads to women founders being overly mentored instead of being given money, a situation that has led to the rise of women-focused venture capital funds in Africa.

More research is needed to understand the gender financing gap in Africa. For now though, it is clear that a 3% return for all-female startups is a cause for concern on a continent where women make up 58% of the self-employed population.

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