In the last year, a number of researchers have shared their findings on the funding prospects for women led teams across Africa.
The Big Deal
According The Bigdeal, a publication by Max Cuvellier and Maxime Bayen, as far as funding goes for startups, 84% of the 2.7 billion USD raised currently in 2021 have gone wholly male teams or only male founding teams, showing a regression in the space as the number was 81% in 2019. Additionally, out of all the startups that have disclosed funds raised in 2021, 15% of have a female CEO.
World Bank Reports
According to the World Bank Profit in Parity Report, the nine main factors that affect women in business performance in Africa are:
Even though this has been major issues in previous years, most of the current laws across most African countries are gender neutral. According to the research most African countries have made progress in removing laws that deny women the same rights as men to register a business, sign a contract, open a bank account, or own and inherit property
Both Men and Women face societal backlash when they go against prescribed gender norms. These societal norms influence how women behave and view themselves, and this is usually at odds with women being ambitious and prioritizing business growth.
Risk of Gender-Based Violence
According to the reasearch In Malawi, 14% of female entrepreneurs have been subject to physical or emotional violence by their domestic partner; 32% say their husband insists on knowing where they are at all times. This affects women going into male dominated spaces and activities in business that might put women in danger of violence.
Education and skills gaps
Though there is parity in primary school education, there are gaps in tertiary and secondary educations, which may explain gender differences in strategic business decisions.
Finance and Assets
Even though the gap in access to credit has narrowed for women, there are still issues with women owning smaller share of assets, which mean that they lack access to bank collateral for example.
Access to Networks and Information
Networks in business are important for growth and men tend to have larger more diverse network as compared to women. This means men are able to leverage more resourceful networks, for business growth.
Household Allocation of Productive Resources
According to the research, women often lack authority over the allocation of household assets and may face more pressure to share resources, which restricts both their willingness and ability to invest in their businesses.
Time Constraints and Child Care
Women bear the large chunk of domestic and childcare responsibilities in the home. This is detrimental to the time they can invest in conducting business. According to the research, being married increases the gender gap in time spent on the business.
Confidence and risk preferences
According to the self-reported data, the report states that female entrepreneurs demonstrate less confidence in their abilities, which may make them less willing to compete (and win).
I disagree with the analysis of this data; I discuss this in the last section of this blog
Briter Bridges Report
In 2021, Britter Bridges and World Bank launched a report named In Search Of Equity Exploring Africa, a look as the Gender Gap in Startup Finance.
The report sample of 172 entrepreneurs, male and female founders across sub-Saharan Africa.
The key findings are:
- Female founders are underrepresented in the most funded startup areas e.g. fintech
- The research states women are likely to work in sub sectors that attract less investment like edtech or healthtech and goes on to point women who do build in highly fundable areas they overall receive less funding their male counterparts. I delve into this analysis later in the blog.
- A confidence gap separates female and male founders in our sample
According to self to self-reported data, the research states that women showed less confidence in the ability to pitch to investment even though they had comparable education qualifications and experience . I disagree with this analysis of the data and delve into this later in the article.
- 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.
All these research data points leave us more questions than it answers in the bid to ensure more women are funded.
Firstly, I do not think it is fully a question of women being underrepresented in the highly funded areas; it is that the areas that women gravitate to are underfunded. The market size for fem tech, an area where a lot of women led startups like to congregate in 2019 was approximately USD 15 million. The market is expected to surge at a CAGR of 17% and is anticipated to surpass USD 71 million by 2026.
Femtech (or female technology) is a term applied to a category of software, diagnostics, products, and services that use technology often to focus on women’s health. This sector includes fertility solutions, period-tracking app, pregnancy and nursing care, women’s sexual wellness, and reproductive system health care.
Also, why are there less women building startups in the space?
Why are VC’s not clamoring into the space? I suspect it’s because they don’t understand it because the typical VC is male.
Fixing the gap will also have to include the democratization of funding and showing more diversity in the VC space.
Secondly, in order to fully fix the funding gap issues we have to start research that delves beyond the surface answer to issues properly. All the reports consistently point at a confidence gap for women and I think it a wrong analysis of the data and leads to incorrect solutions like training programs to help women develop confidence. I believe the problem is not that women are not confident , it is more likely ( and research backs this ) , in self-reported evaluations women tend to more realistic about their skill set whist men tend to be over confident , hence men are most likely to over represent in highly confident metrics than women.
A blanket prescription of low confidence over looks what why women exhibit certain behaviors, women pay a social price for over assertiveness and tend to act in ways to fit into social norms and that must be taken into consideration in these research findings .