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Africa’s female entrepreneurs, such as their US and European counterparts, are underrepresented when it comes to raising funds.

Their start-up journeys are also often a lot more arduous, say investors such as Polo Leteka, co-founder of Alitheia IDF, the continent’s largest gender-led fund.

The issues are “probably more pronounced here because we have more underlying problems”, said Leteka, pointing to her own experience with tapping investors for funds.

“There was this mentality that African women are just supposed to sell tomatoes on the side of the road.”

While surmounting such stereotypes is getting easier, huge barriers remain. For every $1 (R15.21) invested in women, $25 goes to men in the African start-up space, according to the World Bank.

Companies founded or cofounded by African women — many with international alliances, networks and operations — drew 16% of the total $5.2bn raised on the continent by start-ups, according to data from Partech. That compares with 14.7% of the pie in the US and 13.6% in Europe, Pitchbook data show.

The numbers, however, don’t capture the challenges of purely home-grown companies started by African women and the cultural barriers they face, entrepreneurs and fund managers say.

One research showed that when start-ups make pitches, men get asked to speak about the opportunity of their business while women are asked about the risks and their plans to have children.

The men usually get the funding. Take Jihan Abass, the founder and CEO of Lami Insurance Technology, a digital platform for financial services in Kenya and parts of Sub-Saharan Africa. Abass grew up in Mombasa and worked as a commodities trader in London for Toyota before starting her firm.

“I had to show a lot more compared to what I heard my male counterparts were expected to show,” she said in an interview. “During the fundraising process, you see other people who have less revenue, fewer partners or whatever metric it is, but they raise more money at a higher valuation; of course it is offensive.”

Lami, which announced a year ago that it had raised $1.8m, is doing a new round of funding — relying primarily on women investors.

“The lead investor who found us and invested in us last year was a woman and the person working with her on the deal was also a woman,” Abass said.

“The same thing this time. The more women you have, the more likelihood of them finding other women to invest in.”

The push to groom more women entrepreneurs has spawned a new breed of gender-focused funds in Africa. When Leteka started out in 2007, she was the first and only women-owned private equity firm in SA, and was partly able to raise money because of the government’s drive to include more women in the economy.

Since then other such funds have sprouted across Africa.

“I recognised it was really difficult for women to access capital,” said Lisa Thomas, who is raising $35m for a gender-lensed African fund called Samata Capital.

She and other female fund managers have come together to create a pan-African network of more than 70 women to seek out deals and support entrepreneurs.

“If women or half of the founders are being left out, then that is an arbitrage opportunity for me because we will find those diamonds in the rough, we will support them and they will outperform everybody else,” Thomas says.

Governments are trying to do their bit, with countries such as SA, Tanzania and Kenya prioritising women suppliers in some of their public procurements.

But broader hurdles to funding projects often drive women away, especially if they are just starting out.

“There are fewer women coming through the ecosystem,” said Natalie Kolbe, managing partner of Norrsken22, an Africa-focused fund started by a Swedish tech start-up, which expects to raise $200m or more this year.

“There is capital available but the ecosystem is not producing women entrepreneurs.” Consider Anna Njoroge in Nairobi, founder of an African skin and hair products start-up called Ythera Beauty, who says “accessing long-term financing is a struggle” for entrepreneurs like her.

“A lot of private equity want to fund deals starting maybe from about $3m,” she said. “You have a lot of small businesses that may need $15,000 or $100,000, half a million dollars until they get to the next level.” Njoroge, who expanded into the US in December, is having to self-fund her business.

One issue hurting women founders is the investor focus on the tech space, which is where a majority of African unicorns are emerging, says Jessica Espinoza, CEO of the 2X Collaborative, an industry body for gender-focused investing.

“This isn’t necessarily the sector where female founders are,” she said. “As an investor, if you want to fund women-led start-ups, you might need to look to other sectors such as healthcare and reproductive care.”

Still, when they are in a tech-related sector, women entrepreneurs thrive. Last year, Gro Intelligence, a Nairobi and New York-based provider of artificial-intelligence driven real-time agriculture and climate updates raised $85m.

“Women are judged by what they’ve done in the past solely while men are being judged by what they say they’ll do in the future,” said Tokunboh Ishmael at Alitheia Capital, who launched a $100m gender-investment fund.

“Even in cases where I’ve trained male colleagues in this industry, I would be judged as less capable than those same colleagues.”

Marie Stavelot, a Belgium-born Congolese luxury resale aggregator based in Dubai, tells a similar tale. Stavelot, who founded her company, Reluxable, in December 2020 and launched her platform this year, is looking for about $1m for the next 16 months to expand her business. The luxury second-hand market is growing, and her sales have been rising. After self-funding operations through her savings and help from her mother, she reached out to more than 200 venture capitalists globally — with no success.

“There are always suggestions saying you want to try an accelerator programme, mentorship and things like that, but why? I am an entrepreneur like any other male entrepreneur,” said the London-educated former bank credit analyst.

Bloomberg News. More stories like this are available on bloomberg.com


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