African female-led startups need more funding

Future Females Invest hosted a webinar on 21 May to explore how angel investors can provide early-stage funding and raise finance for more women-led start-ups.

Despite women being 58% of the self employed population, there are still significant imbalances in terms of opportunities to scale, access to funding and training between men and women-led businesses. Research has also shown less than 5% of venture capital funding for African start-ups went to companies with women as co-founders in 2019. Moreover, female start-up CEOs signed just 8% of deals of USD $1 million and start-ups in Africa bagged only 4% of the total amount raised the same year.  The situation being far worse in 2020, given the COVID-19 pandemic.

Addressing this issue via a webinar session, Future Females Invest, in collaboration with the Lagos State Employment Trust Fund, welcomed industry experts who shared insights on how angel investors can provide early-stage funding and raise finance for more women-led start-ups. Adesuwa Okunbo Rhodes (Founder/Managing Partner of Aruwa Capital Management), Yemi Keri (Award winning Technologist), Umulinga Karangwa (Fund Manager and Investment Advisor) and Aysha Tegally (Founder of Future Females Invest) were the panellists. 

Kicking off with the session, Adesuwa mentioned ; “looking at the statistics and the imbalance we have, in Africa; we have the most enterprising female entrepreneurs in the world. One in four women start or manage a business, that is because we are not waiting for our husbands to feed our children. The African Development Bank mentions that access to capital for women is around USD $42 billion. There are less than 10 private equity funds that are run and managed by women that have successfully closed in the last decade. We need more women allocators to act as examples and support women. I believe women need to be able to invest in women. When women allocate capital, they are 2.5 times more inclined to invest in a female CEO, this is not because of gender lens criteria, it’s just natural. We are not going to realize our potential until we do this.”

Yemi stated that women need to continue to mentor women and then be able to stand in front of investors and make their pitch to invest in them and their products. “Our pool of knowledge and capacity has increased. We have a vast number of women on the African continent with a number of skills, we invest in them in terms of funds, but also our time. We look for those women that are making a difference with their product or service.” 

Now, as a fund manager, Umulinga explains that she joined FFI Angels as a businesswomen enabler because she was shocked and puzzled by the ratio where 2-98 women are being funded. She says, “This is incredibly unacceptable, it hasn’t been difficult for us to find many women-led startups, but raising funds is an issue.” Moreover, FFI will be launching an angel network to address some of these issues and to close that funding gap. “We can invest in female-led companies in Africa, to enable more women to meet the needs of more women, because 80 per cent of funding decisions are made by women. FFI will be holding a series on how women can become angel investors.”

It should also be noted that a lot of capital is being allocated in the Tech space. In West Africa, Nigeria is a perfect market. It is a fast-moving market with consumer goods, beauty and hair care and so on but these sectors are not traditionally investable for VCs. 

On a concluding note, FFI Founder, Aysha Tegally stated, “FFIs Angel network is all about collaborating all across the continent, so we are able to bring together bigger deals. Like many others who focus on backing female-led startups, we have no trouble finding good deals. There are plenty of amazing and excellent women entrepreneurs. We are here to mentor, train, connect, network and refine. Women who have the capital to allocate, whether it is a small or large deal, we look at it and ask how much do you want to invest? No amount is not enough. We are looking forward to the journey ahead with enthusiasm and excitement.”