AFR I LABS
KUBATANA MAGAZINE | OCTOBER 2022
Is there a gender gap in financing Africa’s early-stage ventures? Are there differences between female and male founders—such as the sectors they choose, or the ambitions they have—that could explain divergent funding paths? As start-up financing in Africa keeps climbing to new records, these questions are becoming more urgent. To find answers, Briter Bridges’ and the World Bank’s Africa Gender
Female founders are underrepresented in the sectors that attract the most financing. This underrepresentation is partly because there are more male than female founders, and the latter are also more likely to operate in sub sectors that attract less investment, such as edtech or healthtech. However, even when they work in sectors with high investor interest, all-female teams are still less likely to receive
financing than all-male teams, and they receive smaller amounts if they do receive financing. In our sample of 172 entrepreneurs, male and female founders followed different financing paths. Female founders in our sample were less likely to pitch for equity investments than male founders. Conversely, they were more likely to apply for bank loans or to prefer growth from retained earnings. Among companies that raised external financing, however, those with all-male founding teams received higher amounts of both equity and debt. A confidence gap separates female and male founders in our sample. Female survey respondents showed
IN SEARCH OF EQUITY: EXPLORING AFRICA’S GENDER GAP IN
Innovation Lab combed through years of deal flow data and surveyed a random sample of 172 entrepreneurs operating across the continent. Here is an excerpt of what they learnt: Female founders receive only a small fraction of the total investment in African technology firms. Their analysis of start-up financing deals since 2013 shows that only 3 percent of funding went to all-female founding teams, compared with 76 percent of funding that went to all-male teams. The amount of funding they received is disproportionately small because 11 percent out of the 2,400 companies for which demographic information was available, are all- female teams. And, although investment in the African tech space has skyrocketed since 2013, the proportion going to all-female founding teams has changed very little.
less confidence in their ability to pitch to investors and in their firms’ ability to grow. This confidence gap is despite the fact that women entrepreneurs in the sample were more educated, had the same amount of professional experience as male founders, and experienced similar revenue changes in the previous year. Female entrepreneurs pay it forward. Companies led by female founders in the survey were twice as likely to hire women, and four times as likely to employ female managers.
FEMALE FOUNDERS RECEIVE ONLY A SMALL FRACTION OF THE TOTAL INVESTMENT IN AFRICAN TECHNOLOGY FIRMS. THEIR ANALYSIS OF START-UP FINANCING DEALS SINCE 2013 SHOWS THAT ONLY 3 PERCENT OF FUNDING WENT TO ALL-FEMALE FOUNDING TEAMS, COMPARED WITH 76 PERCENT OF FUNDING THAT WENT TO ALL-MALE TEAMS.
STARTUP FINANCE
Read the full report at www.briterbridges.com
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