How women-led ventures in Africa are underfunded

Speaking yesterday during the 2023 Start-up Funding Round-Up live session organised by Africa: The Big Deal, head of Mobile for Development at GSMA Max Cuvellier Giacomelli emphasised the need for collective efforts to address the issue.

 “I think it’s important to put emphasis on the fact that women are underfunded in Africa at the moment. It’s not about placing blame but recognising the existing gender gap in funding. We need to rethink our investment strategies to create a more inclusive and equitable entrepreneurial ecosystem in Africa,” he said.

Data from the study conducted by Africa: The Big Deal reveals that the majority of funding – a staggering 86 percent – goes to either solo male founders or male-dominated teams. Only two percent of funding reaches solo female founders or female-led teams, indicating a significant imbalance in the distribution of financial support.

“If we want to find some kind of silver lining, we can look at the number of ventures raised as opposed to the amount raised: of the 200+ start-ups who raised at least a $1 million+ round in 2023, 6 percent had a solo female founder or an all-female founding team, and 26 percent had a female founder, either a solo female founder or a founding team with at least a woman,” Mr Giacomelli said.

There has been no noticeable change compared to 2022. This also means that solo female founders and all-female founding teams raise less on average per $1 million+ deal versus solo male founders and all-male founding teams: $4.4 million vs $15.8 million, which is 3.6 times less.

Sharing insights from the findings, Niajiri founder Lilian Madeje said females being under-represented was a global issue.

“The problem is not only in Africa, or Tanzania, to be exact. In a country where women are moulded to be entrepreneurial from birth, the start-up world seems to have not favoured them as much,” she said.

But despite the slow growth, Ms Madeje voiced optimism that the situation was changing for the better and pointed out notable strides made over the last ten years.

“I see an enabling environment being created to help more women establish start-ups in Tanzania.”

Speaking on the situation in Tanzania, Sahara Ventures chief executive, innovator and technology enthusiast Jumanne Mtambalike emphasised the long-standing issues that contribute to the gender gap in entrepreneurship in the country, including limited Stem (science, technology, engineering and maths) foundations, technical education disparities and male dominance in investment ecosystems.

“First, there’s a very small group of women who have a strong foundation when it comes to Stem subjects. This causes most women to struggle later on when they attempt to establish tech startups,” he said.

Mr Mtambalike added that a lack of a robust academic background in technology subjects makes it challenging for women to establish and sustain tech startups, creating a significant hurdle for aspiring female founders.

Beyond these systemic issues, he touched upon social and cultural factors, noting that women in many African families were often not given the chance to express themselves, communicate in public, or showcase their skills.

This limitation of essential skills such as communication, creativity, teamwork and critical thinking contributes to the underrepresentation of women in strategic positions within businesses.

“The problem is more of a systemic and a social issue, which eventually tend to impact how businesses operate, and the number of women who are sitting in strategic positions to make decisions, which eventually affect how they raise capital from, again, families that are male-led,” Mr Mtambalike said.

Ms Neema Magimba, managing partner at the law firm Extent Corporate Advisory, said Africa was grappling with deep-rooted cultural norms and gender biases.

“These biases often result in limited access to resources and opportunities for women entrepreneurs to fully explore entrepreneurship opportunities compared to our male counterparts. Women-led startups frequently encounter challenges in accessing funding,” she said.

The study shows that only 14 percent of funding goes to teams with at least one woman, emphasising the need for a more inclusive investment approach. The data suggests that, for every dollar invested in a startup, only 23 cents go to female-founded teams, while 75 cents go to solo male founders.

Ms Magimba emphasised the overarching influence of male dominance, especially in venture capital and investors’ circles.