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African Venture has a gender problem 💁🏾‍♀️

Less than 1% of funding goes to female-led companies

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Caleb Maru & Marge Ntambi
March 08, 2023

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Morning, and happy International Women’s Day!

Today I’m joined by friend and investor, Marge Ntambi, for a special edition on gender diversity in African venture.

Marge is a brilliant mind in African tech. She has researched the space for years, and is on a mission to map Africa’s tech history to pinpoint where the ecosystem is going.

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African Venture has a gender problem 💁🏾‍♀️

A lot of African women are entrepreneurs. 40% of African businesses are started by women - more than 2x the global average.

Not all of them are tech-enabled and can receive venture - but the point remains that African women are entrepreneurial compared to their global counterparts.

And while both male and female entrepreneurs have nearly equal access to loans, the gender venture capital funding gap is astonishing.

Data from Africa: The Big Deal shows us that on average, between 2019-2022..

  • 85% of funding went to male-only founding teams or solo male founders.

  • 14% of funding went to mixed-gender founding teams.

  • And only 1% of funding went to female-only founding teams or solo female founders.

And even when female-led teams do manage to raise funding, it’s less than their male-led counterparts.

  • Female-led teams raised $1m less at Seed and $8m less at Series A than male-led teams.

  • Female-led teams were represented in 12% of deals that raised less than $1m and 4% of deals that raised above $1m.

So, there are many female-led tech companies out there. But they’re not raising anywhere near what male-led companies raise.

So where do they go? As it turns out:

  • Women tend to raise $1m more than men in grant funding.

  • They are more likely to apply for bank financing, and prefer growth from retained earnings.*

  • While there is a funding gap in venture debt between male-led and female-led companies, access to standard loans is about equal.*

In Search of Equity from Briter (only accessible through download).

Why the funding gap?

While there is a combination of factors that contribute to the funding gap, we’ve highlighted three: bias, networks, and resourcefulness.

Bias

For investors, the identity and attributes of women are at odds with that of founders (a male gender-typed role). This makes women less likely to become entrepreneurs, and investors less likely to select and invest in female founders.

A study by MIT assessed how investors made funding decisions.

*The pitch was the same between founders - the difference was the gender of the founder and their physical attractiveness. They found that male entrepreneurs were 60% more likely to get funded than female entrepreneurs.

Networks

In Sub-Saharan Africa, business networks are segregated, with men’s networks controlling more resources. Women tend to network mostly with other women.

Resourcefulness

Female founders are more likely to fund their businesses through personal investment or debt, and are more likely to receive grant funding.

Pre-revenue female-led companies are more likely to bootstrap to reduce labor. Post-revenue companies are more likely to minimize their cost of operations, shooting for profitability instead.

But there are many other factors at play that contribute to the funding gap. What else contributes to Africa’s venture funding gap? Let us know here on LinkedIn.

When we look deeper into the data on female-led companies, the gap in funding doesn’t add up.

Female-led companies are actually better investments

Women punch well above their weight when at the helm of their own companies.

Female founders are more qualified.

In Briter’s ”In Search of Equity” report it was found that:

~50% of male founders have a bachelor’s degree as their highest educational degree and 25% have a master’s degree.

~34% of female co-founders have a bachelor’s degree and 40% of them have a master’s degree.

Women are a better return on investment (literally)

Businesses founded by women deliver more than 2x revenue per dollar invested than those founded by men.

Teams with female founders create 63% more value than all-male teams.

Women do more with less

Despite receiving less funding, female-led companies generate 10% more cumulative revenue than male-led companies. They’re also more profitable, requiring less labor and assets to deliver the same output.

So, there's a funding gap - but women punch well above their weight. So who is crushing it in African Tech, you might ask? We’ve got you covered.

Spotlight Time 🔦

There are so many brilliant women in Africa’s tech ecosystem.

Today we’re spotlighting five who have really paved the way for Africa’s tech ecosystem.

Dr Ola Brown MFR - Healthcap

Dr. Ola is an enigma. Her journey began as the founder of Flying Doctors Nigeria Ltd. in 2011 - the first air ambulance in West Africa.

She was motivated to start Flying Doctors after her sister tragically died while needing urgent care.

She now runs Healthcap - a firm that invests in infrastructure and early-stage fintech and health tech startups.

She’s an important figure in African tech and drops the best takes on investing in Africa on her twitter.

Eloho Omame - FirstCheck Africa

In 2021, she started FirstCheck Africa - a $10m fund that invests in female-led startups across Africa.

Last year she joined TLcom, one of Africa’s largest funds, to back more pre-seed and female-led startups.

And when she’s not deploying capital, she’s writing about the gaps (and opportunities) in funding female-led startups in publications like The Flip, Rest of World, and The Economist.

Maya Horgan-Famodu - Ingressive

When Maya started in 2014, she wanted to get a job in venture capital. When it didn’t work, she decided to start a fund herself.

Five years later, Maya closed Ingressive Capital Fund I. Today, Ingressive Capital is a name-brand firm in Africa. 40% of Ingressive’s portfolio companies are female-founded.

Ingressive’s impact hasn’t stopped there. Maya has spun out Ingressive for Good - on a mission to train and increase the earning power of one million African youths through tech training.

Special mention to the incredible Blessing Abeng who is a co-founder of Ingressive For Good and a friend of Tech Safari 👋🏾

Sara Menker - Gro Intelligence

Ethiopian-born Sarah Menker started as a trader on Wall Street and left to start Gro Intelligence in Africa to tackle climate change and hunger through data and AI.

Today, she is a top voice in technology and climate change - Advising the US Agency for International Development and chosen as one of TIME’s most influential people.

And her company, Gro Intelligence, has led the way for African venture funding - raising an $85m Series B round in 2021 - the most raised by a female-led company at the time.

You can keep up to date with her thought leadership here.

Ruth Iselema - Bitmama

Ruth graduated as a pharmacist but found that entrepreneurship was more her style.

And in 2015, she started learning about cryptocurrency in Telegram and WhatsApp groups.

Ruth remembers being one out of two women in the crypto space, and as a result, being called ‘Bitmama’ online.

And noticing crypto trading platforms in Africa weren’t safe for users, she moved to bustling Lagos, determined to start her company, Bitmama.

But fast forward to last year, and Ruth is telling me about Bitmama in a cafe in Lagos, cruising past 70,000 users and raising a $2m pre-seed round.

These are just five women crushing it - but we know there are many more.

If there are women you want to celebrate in African Tech share them with us on LinkedIn.

What will move the needle in African Venture Funding?

There are many solutions to the complex problem, but three we want to highlight are role models, intentionality, and opportunities.

1) Role models

Role models, like the five women above, are important to inspire the next generation of female founders, investors, and tech workers.

In 2015, Ruth was one of two women in crypto in Nigeria. Today, there are hundreds of women in African crypto.

2) Intentionality

Fund managers need to be intentional about who they invest in.

From simply having the conversation and tracking diversity in their portfolio to committing to invest in female founders.

A few funds are leading the charge and making that commitment to invest in female-led companies.

Some quick links:

A quick note - At the investor level, 12% of senior investment professionals in Sub-Saharan Africa and 7% in Middle East North Africa are women.

At the General Partner level (non-fund people - think of General Partners as the ‘bosses’) - 17% of Sub-Saharan Africa and 8% of Middle East North Africa’s GPs are gender balanced.

3) Opportunities

Finally are opportunities for more women to break into and thrive in tech, startups and venture capital. A few on our radar include:

Thanks to curator of all things African Tech, Anthony Catt, for sharing these.

Investing in the future

Making an investment is casting a vote on the future you want to see.

The African future we want is one of abundance with women at the table, building the future.

And while there is a long way to go, we’re starting to see progress.

What else can we do to bridge the gap?

Let us know here - or reply to this email with your take.

And before we round off - one more woman I want to celebrate today is Marge!

Marge has been studying Africa’s tech ecosystem for years and is finally putting her insights out there at events and in newsletters like these.

Her insights into African tech on Twitter go deep, and I cannot wait for her newsletter Sourcing Africa to Invest (Sati) to drop soon.

If you liked today’s edition you know what to do!

SatiSourcing Africa to Invest

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Catch you soon!

👋🏾 Caleb