Unconscious bias inhibiting growth of female entrepreneurs in Nigeria
The entrepreneurial tenacity of Nigerian women entrepreneurs is exceptional, and research from the World Bank has demonstrated the exponential effect their success has on the welfare of their immediate families, as well as on the wider community. From this, we assume that given an enabling business environment, the success of female owned businesses is assured.
Nigerian ranks high among the rate of entrepreneurship in the world, this is not farfetched given that low-income countries who lack human capital and the necessary infrastructure required to generate quality jobs will alternatively engage in hand-to-mouth businesses and entrepreneurship ventures. Approximately 40% of Nigerian women are entrepreneurs or have a side hustle. However, it is commonplace for most of these women to be necessity driven as opposed to the male counterparts who are mostly opportunity driven. This further drives the case that most male entrepreneurs are high value entrepreneurs implying that they have higher incomes and innovative products and services and women continue to remain in the low value range.
It is now a general perception that only a tiny percentage of women receive venture capital funding. Why then is this so when several researches have shown that women are great for business and have the tendency to make back more on every dollar. Yet women continue to struggle with accessing finance, growing, or scaling their businesses and even sustaining it. The perception of female entrepreneurs, by the female entrepreneurs themselves and the entrepreneurial ecosystem may come into play. Very often traits associated with successful entrepreneurs are generally traits associated with men, the number of hours spent looking after kids and raising a home will most likely not make it to the list. This perception has and remains a myth, but the sad implication is that anyone who does not fall into this predefined statistic may have more business challenges especially in accessing growth capital.
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Society’s single-story definition of a woman is that she is second place and would normally come after the man. Unfortunately, women have believed this idea for so long and continue to buy into this definition which unconsciously controls the way we think about everything including the way we run our business and the level to which we scale our businesses to. We may not realize it, but it continues to control even the unconscious bias of investors.
It is only normal to invest in things we understand. It then becomes an intricate cycle when female focused businesses require funding and those controlling the funds are men. Investing in any company is a huge decision, and so when VC partners are considering investing in any company, it is important for them to connect with not just the business, but with the founder as well as the opportunity. A number of female-led businesses may have amazing metrics and incredible growth rate potentials, great margin structures but remain unfunded because funders are just not as passionate about the businesses.
The solution is that female-led equity funds can champion this change by creating a new culture which would positively catalyze investing or allocating capital across women led businesses in Africa. Sadly, a lot of female led businesses are not positioned or structured enough to absorb the kind of funds that these funders are willing to invest, and so beyond the existence of female-led equity funders, it then becomes important for female founders to support other female founders and continue to work together to debunk the myths of the characteristics of a heroic entrepreneur. The VC world is male dominated and this inevitably creates networks that can get these male funders into meetings that they need to be in so that they may have better opportunities to raise finance. It is either he knows these VCs personally or knows one person who knows another person but unfortunately these built-in networks are not as readily available for women. It becomes the role of the female-led VCs to intentionally begin to create easily accessible networks for female founders as well as friendlier investment criteria for growth equity across the various sectors, the minimum investment size cap and opportunities for follow on investment post a smaller tranche of capital investments.
As we begin to begin to create this new culture, the style of entrepreneurship engaged in by Nigerian women would begin to switch to high value opportunity ventures. Women’s unique value and potential as entrepreneurs and business owners remains untapped, it is time to stop sitting on this gold mine and begin to dig up.
Weyinmi Eribo is a development expert with special focus on gender, financial inclusion and enterprise development. She has 8+ years working experience across different sectors – oil & gas, bilateral trade, not for profit management, leadership and extractive industries. She is the founder of Wevvo Nigeria, a resource and community based platform that supports single female breadwinners.