As African venture capital booms, are female founders losing out?

by MMC
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A former sugar trader in the City of London, Jihan Abass knows the sweet taste of success. A special moment to savor for the 27-year-old entrepreneur came in May 2021, when his Nairobi-based insurance technology startup, Lami, raised its first round of institutional funding. Initially funded through personal savings, the company raised $1.8 million from investors who share the founder’s belief in the power of mobile technology to bring financial products at scale to an underserved market.

The story of Jihan Abbas is remarkable, in part because it remains an exception. Venture capital is booming, but it is flocking massively to male founders: in 2020, 85% of venture capital investments in the United States went to companies that did not have a woman on the founding team. Africa has also seen a remarkable increase in startup funding, with total investment up almost quadrupled between 2017 and 2020. Yet funding for female founders has remained slow, a new World Bank report shows. Africa Gender Innovation Lab suggests.

In In search of fairnessa collaboration with the emerging market intelligence company Briter Bridges, we quantify Africa’s gender gap in startup funding and explore some of the factors behind it. For this report, we leveraged Briter’s leading industry platform to comb through years of deal flow data and surveyed a random sample of 172 entrepreneurs operating across the continent. We also spoke to female founders like Jihan to get first-hand accounts of women raising money (or struggling to do so) in a male-dominated industry.

We find that just 3% of seed funding since 2013 has gone to all-female founding teams, compared to 76% to all-male teams. This amount is disproportionately small: all-female teams make up 11% of companies for which we have demographic information. And While investment in the African tech space has soared over the past decade, the proportion going to all-female founding teams has changed very little.

Our research also highlights remarkable differences between male- and female-led startups. On the one hand, female founders are underrepresented in the sectors that attract the most funding. This is partly because there are more male than female founders in the African tech space in general. However, female founders are also more likely to operate in sub-sectors that attract less investment, such as edtech or healthcare. Again Even when working in sectors of high investor interest, all-female teams remain less likely to receive funding than all-male teams, and they receive lower amounts if they do.

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