Rwanda: African Women-Founded Startups Lagging Behind in Funding Opportunities


In the U.S., 2021 was a record-breaking year for startup funding. American-based companies raised roughly $240 billion, dwarfing 2020’s full-year total of $166 billion, according to PitchBook. U.S. female founders had an exceptional year, raising more funds and executing more exits at greater values than at any point in the last decade. Startups with a female founder raised more than $40 billion through September, almost double the amount invested in women-founded companies in 2020 or 2019.

These investments represented roughly 18 percent of the $239 billion raised by all venture capital-backed companies by Oct. 1. 18% may not sound like much, but when looking at Africa’s entrepreneurial scene, that number gets a whole different meaning.

As 2021 comes to an end, single female founders and female-only founding teams have raised less than 1% of the total raised in Africa, while single male founders and male-only founding teams have raised over 81%. This share is lower in Kenya (67%) and Nigeria (76%), slightly higher in South Africa (84%), and reaches 98% in Egypt. From a sector point of view, 96% of fintech funding has been raised by male single founders and male-only founding teams.

These numbers tell an ongoing story that has seen little change in the past decade and does not correspond with Africa’s highest rates of female entrepreneurs worldwide.

African Women are the most entrepreneurial in the world

According to the World Bank, only 3% of early-stage funding since 2013 went to all-female founding teams, compared to 76% for all-male teams, albeit all-female teams make up 11% of the firms. Investment in the African tech space may have skyrocketed over the past decade, but the proportion going to all-female founding teams has changed very little, and in some countries, has only declined.

Across Africa, gender norms are slowly shifting. Women, accounting for a little more than half of the population, are looking for profit-making activities to support their families and households. Today, there are more female entrepreneurial initiatives on this continent than elsewhere globally, as sub-Saharan Africa boasts the world’s highest rate of women entrepreneurs, at 27%, according to The MasterCard Index of Women. In fact, women in Africa are more likely than men to be entrepreneurs, making up 58 % of the continent’s self-employed population.

But when you dig a little deeper, most female-led enterprises are small, one-woman businesses with little opportunity for growth. Looking specifically at the technology industry, few African women attempt to start new ventures or even work in the sector.

Low women engagement in technology has various reasons, including societal norms, lack of STEM education (and more often than not, any higher education for that matter), overwhelming family-related responsibilities, and more.

As multiple countries across the continent look for active ways to establish new gender norms and strengthen the female role in politics, education, and the workforce, innovative initiatives are essential and will allow African women to unleash their potential in the continent’s booming tech sphere. #HerFutureAfrica, African Women in Technology (AWIT), and FirstCheck Africa are only a few examples of notable initiatives led by African Women, already providing new possibilities for influence and creativity in the startup ecosystem.

Invest in a woman, invest in a nation

In the 1920s, James Emman Aggrey, a Ghanian intellectual, missionary, and teacher, said, “If you educate a man, you simply educate an individual, but if you educate a woman, you educate a whole nation.” Not to hurt any male feeling, but according to multiple research, the best, most effective development investment lies in female education

A World Bank study found that every year of secondary school education is correlated with an 18 percent increase in a girl’s future earning power. And research shows that educating girls has a multiplier effect. Better-educated women tend to be healthier, participate more in the formal labor market, make more money, give birth to fewer children, marry at a later age, and provide better health care and education to their children.

In a continent expected to multiply its population by 2050, becoming 25% of the global population, investing in future generations could be a make-it-or-break-it deal. And establishing a future where female entrepreneurs get more funding begins with girls who get better education opportunities.

More opportunities, a more prominent global focus

The investing landscape is changing worldwide. The PitchBook report suggests there is a growing pool of female angel investors and general partners at funds who are actively looking to support female founders. At the end of 2019, 12 percent of general partners at venture capital firms were women, and there were 740 female angel investors. Today, women make up 15 percent of general partners at venture capital firms, and there are now about 1,000 female angel investors.