Getting funding as an African startup founder is hard. It’s even harder when you’re a woman. In 2023, startups with solo female founders or an all-female founding team raised only 2.3% of total funding in Africa. Meanwhile, 15% of the funding went to a founding team with at least one woman. In the previous year, both figures stood at 2.4% and 13%, respectively (data from Briter Bridges).
The funding gap between genders is a global problem. Last year, in the U.S., companies with all-female founding teams scooped just 1.8% of the $170.59 billion worth of VC money raised. This is for an ecosystem that, supposedly, has more data to inform a better margin. In 2015, First Round Capital, a Silicon Valley VC fund, collected data from 300 companies over a decade. And they found that teams with at least one female co-founder outperformed all-male teams by a staggering 63%. They also generate $0.78 revenue per dollar raised compared to all-male teams $0.31. Yet, the funding gap hasn’t improved much.
Ventures Africa interviewed Brenda Wangari, Head of Portfolio Success at Madica —a pre-seed investment program that targets typically overlooked founders— to understand how Africa can overcome this challenge.
VA: Why do you think this funding gap exists in Africa?
Wangari: Firstly, it’s not just in this part of the world. It’s a popular problem globally. Before investments are made, a huge pool of companies often apply for funding. But we’ve seen that many women don’t make it to the end of the funnel. Tech has been a male-dominated industry for a long time. Even when people organise interventions and hackathons, you’d often find only a few women there, if any at all. In general, the reasons differ from one woman to the other. But also, these programs often have a one-size-fits-all approach that wasn’t designed with women in mind.
When you come to the African context, a woman has responsibilities as a homemaker, regardless of her career. It’s not the same with her male counterpart. There’s data that Africa has a high concentration of female entrepreneurs. But many of these women run livelihood-sustaining enterprises like running a salon or a shop selling fast-moving consumer goods. And on the other end of the spectrum, where you have high-growth companies, you’ll find mostly men.
Also, there’s a lot of investor bias in the VC space. For the longest time, many funds on the continent have not had female partners. As a result, what eventually happens is a lack of diversity in the types of businesses they fund. It’s not a problem that is impossible to solve. A lot of people just need to be intentional about it.
VA: Okay. So, how can Africa solve this problem?
W: The short answer is to find female founders and fund them. One trend that I’ve found interesting is that many funds are more likely to have women as consultants than have them as part of those running the fund. But this typically adds to the diversity of opinions on what to look at when screening a company. And it’s probably one of the reasons why female funding has seen a steady increase, albeit small, in the last few years. So, the other solution is to let more women in the decision-making rooms.
At Madica, we’re getting ready to announce our first batch of investments. All of them have female co-founders.
VA: You have interacted with, and backed many female-led startups. Are there any challenges specific to them?
W: I think when it comes to running businesses, most challenges are not unique to gender. They could be unique to their business models, country of operation or the sector they are in. There’s also the struggle that comes with being an early-stage startup. For example, you want to hire the best team and make them high-performing from the very beginning. You also want to validate your business model, determine who’s your most valuable customer and how long it will take you to break even.
Access to funding is usually the most common challenge female founders have.
VA: How do you see Madica and other peers in the ecosystem closing this gap?
The most important thing is for everyone to become very intentional about who we support. When we use a one-size-fits-all approach to support founders, it doesn’t work. Each entrepreneur has unique challenges. So, for female founders, you have to consider that many of them are primary caregivers in their homes when designing programs.
We also must have more successful female-led startups to drive this cause. For us at Madica, we support founders in several ways. One of them is mentorship under experienced operators who know what it takes to build and expand companies. This connection with high-quality support really makes a difference in the companies we back.
