African women CEOs in tech startups are narrowing the funding gap

Tech startups in Africa led by women are attracting an increasing share of funding. Experts believe that with increased mentoring, this gender gap can be narrowed further.

By Bonface Orucho

Funding to female-led tech startups in Africa is surging, defying previous regressive trends. According to Africa: The Big Deal’s latest Q3 2023 report, woman-led startups now command 19% of total equity funding—the highest since Q1 2021.

This marks the fourth consecutive quarter of growth, according to the Africa startup database and insights provider, and is a substantial increase from a year ago, when the amount was only 4% in Q4 2022, increasing to 7% in Q1 2023, 12% in Q2, and now 19%.

The 19% share stands as the second-highest share since 2019, trailing only Q1 2021’s, 25%, recorded at a time when startup funding was in full flow in Africa.

However, despite this upswing, the funding landscape remains riddled with stark gender disparities. From the outset of 2023 up to the latest Q3, a staggering 73% of equity funding flowed into startups devoid of female founders. Conversely, less than 2% was garnered by those without male founders.

Additionally, while female CEOs secured roughly 11% of total equity funding in 2023, translating to US$154 million, that amount was dwarfed by the US$1.2 billion amassed by their male counterparts.

However, Max Glacomelli, a researcher at Africa: The Big Deal, points out that the gender gap is narrowing.

“Basically, for every dollar raised by a female CEO, this year male CEOs raised nearly 8 dollars… It is nothing compared to what it was last year when for every dollar a female CEO raised, male CEOs raised 29 dollars,” he explained in a recent webinar.

A highlight of these major funding rounds in the latest quarter has been the health tech sector. In July, Rwandan women’s health tech startup Kasha secured a US$21 million Series B investment. This injection of capital aims to bolster its footprint across the continent, with expansion plans set for West Africa in 2023.

Likewise, MyDawa, a Kenyan e-health startup, raised a substantial US$20 million, with a strategic focus on scaling operations in Kenya and Uganda, where it earlier acquired a pharmacy e-health startup, Guardian Health.

Kikelomo Owoyale, a Nigerian startup consultant and financial analyst, shed light on the hurdles hindering female-led tech startups, including gender bias, demand constraints, and self-imposed limitations.

“It’s vital to not only promote diversity in investment networks and showcase successful women entrepreneurs but also empower women to break free from self-imposed constraints,” she explained.

A 2023 report by Disrupt Africa revealed that fewer than 10% of African tech startups are led by female CEOs, and less than 15% have a female co-founder.

“More women should be prepared and mentored to show up first as founders or co-founders… and then make their ask with a clear value proposition,” said Imade Bibowei-Osuobeni, president of the board of trustees at Tech Herfrica, a Nigerian fintech.

The growth trend among female-led tech startups comes at a time when the broader tech funding ecosystem, both in Africa and globally, is in a slump. According to Big Deal, the funding landscape in Q3 2023 was the most subdued since Q4 2020.

In Q3 2023, global venture funding decreased by 15% to US$73 billion compared to the previous year, according to Crunchbase. PitchBook data shows globally, all-women founding teams secured 1.9% of total venture capital, amounting to US $2.4 billion out of US $125 billion allocated through Q3. This figure is lower than the previous year’s Q3, where they raised US$4.1 billion of US$205 billion; this represents 2% of the total capital raised.