Madica: Tackling Africa’s startup funding gap, empowering female-led innovations

Francis Vesta, an investment associate at Madica, a structured investment program for pre-seed stage companies in Africa In this interview with BusinessDay’s CHINWE MICHAEL spoke on Madica’s commitment to addressing Africa’s startup funding challenges is reshaping the entrepreneurial environment, particularly for female-led and pre-seed startups.

African startup funding dropped to $2.2 billion in 2024, its lowest in at least four years. As an early-stage investor, why are startups getting less funding?

The decline in African startup funding reflects broader global economic trends, including rising interest rates and tightened venture capital markets. Specific industries may have begun to be less attractive for investors due to a combination of factors such as the spending power of end users (heightened by inflation), and alternatives, among others.

Investors are increasingly cautious, focusing on profitability and sustainability over rapid growth. However, this creates a unique opportunity for early-stage investors like Madica to identify and support resilient startups tackling critical challenges. These companies can demonstrate long-term value even in a constrained funding environment.

One of your recent investments was in Earthbond, a female-led digital energy platform. Why do you believe this approach has transformative potential for the continent’s economic growth?

Earthbond integrates cutting-edge technology with a deep understanding of Africa’s energy challenges. The platform addresses systemic inefficiencies in the power sector by enabling access to affordable, renewable energy solutions, and boosting productivity and economic activity. Additionally, Earthbond unlocks access to the carbon credit market, which further de-risks financing for SMEs in Africa. This dual approach empowers SMEs to adopt sustainable energy solutions, significantly contributing to broader sustainable development goals.

Nigeria’s power sector remains one of the continent’s most pressing challenges. How does Earthbond’s solution differentiate itself from existing options like backup generators?

Traditional backup generators, while widely used, come with significant drawbacks that make them less than ideal for addressing energy needs. These systems are not only expensive to install and maintain, but they also contribute heavily to environmental pollution and are vulnerable to the unpredictable fluctuations of fuel prices.

In contrast, Earthbond’s innovative platform provides an alternative by creating a dynamic marketplace that seamlessly connects financiers, renewable energy providers, and small to medium-sized enterprises (SMEs). This advanced, software-driven solution simplifies the complex process of transitioning to cleaner and more sustainable energy sources. By prioritising cost-effectiveness and promoting long-term environmental and economic sustainability, Earthbond’s platform tackles the underlying causes of energy instability head-on, offering a holistic approach rather than merely addressing its symptoms.

What ripple effects do you anticipate this investment will have on other sectors, such as healthcare, education, or fintech, that are heavily reliant on stable energy?

Access to stable and affordable energy unlocks growth across sectors. In healthcare, reliable power ensures life-saving equipment functions without interruption. In education, schools can adopt digital learning tools and extend study hours. Fintech companies, which rely on data centers and digital infrastructure, can operate more efficiently. Earthbond’s impact will create a foundation for innovation and economic development across multiple industries.

Africa sees only 2% of funding directed toward female founders. What drew you to support Chidalu, and how does Madica aim to address the gender funding gap?

Chidalu impressed us with her visionary leadership, remarkable technical expertise, and unwavering dedication to addressing Africa’s pressing energy challenges. Her innovative approach to leveraging cutting-edge technology for societal impact aligns seamlessly with Madica’s overarching mission to drive transformative change.

In our efforts to address the persistent gender funding gap within the entrepreneurial ecosystem, we proactively identify, support, and champion female founders and gender-diverse founding teams. Moreover, we go beyond financial backing by offering meticulously tailored support and collaborating with initiatives that actively promote inclusivity, equity, and diversity in entrepreneurship, ensuring a more balanced and empowered future for all.

What role do female entrepreneurs play in driving innovation and socio-economic progress in Africa?

Female entrepreneurs play a transformative role in addressing societal challenges, bringing unique perspectives and innovative approaches to problem-solving. Their ventures are often deeply rooted in personal experiences, which enable them to understand and tackle pressing issues with unparalleled insight and determination. This connection frequently drives innovation in critical sectors such as healthcare, where they develop solutions to improve access and outcomes; education, where they design tools and systems to empower communities; and clean energy, where they champion sustainable practices to address environmental concerns.

By fostering solutions that resonate with local needs, female founders not only create businesses but also catalyze wide-reaching societal change, improving lives and fostering progress across multiple dimensions. Supporting female entrepreneurs transcends mere economic empowerment; it represents a commitment to promoting gender equity, amplifying diverse voices, and driving inclusive growth. As these women-led ventures flourish, they strengthen Africa’s economic and social fabric, creating a ripple effect of opportunities that inspire future generations and contribute to a more equitable and prosperous society.

What strategies or initiatives do you believe venture capital firms should implement to address the persistent funding gap between male-led and female-led startups?

VCs need to reframe their sourcing strategies, including partnerships with organisations focused on female entrepreneurship and implementing blind evaluation processes to reduce bias.

Additionally, offering robust mentorship programs and creating gender-inclusive networks can play a pivotal role in empowering female founders by providing them with the support and resources necessary for success. At Madica, we take a proactive approach to identifying and supporting female founders by engaging directly with them, fostering trust through strong ecosystem partnerships, and equipping them with the tailored resources, mentorship, and networks they need to successfully scale their ventures and thrive in competitive markets.

What motivated Madica to focus on pre-seed startups in Africa, and how do you identify the founders with the most potential amidst the perceived risks by global investors?

Madica is driven by the belief that Africa’s most pressing challenges require bold, innovative solutions, often from founders operating at the pre-seed stage. We look for founders who demonstrate a deep understanding of the problem they’re solving, the scalability of their solution, and resilience in the face of challenges. By providing funding and strategic guidance early, we help these founders build a strong foundation for growth.

Your approach includes collaborations with local ecosystem players like incubators and angel networks. How do these partnerships influence the selection and success of the startups you invest in?
Collaborating with incubators, accelerators, and angel networks provides us with valuable local insights and access to promising startups. These partnerships enhance due diligence, ensure alignment with community needs, and provide startups with a supportive ecosystem. By leveraging these connections, Madica increases the likelihood of long-term success for our portfolio companies.

What advice would you give to other African entrepreneurs seeking funding and support for their startups, especially in the face of challenges like access to venture capital?

To succeed as an entrepreneur, it is crucial to begin by dedicating significant time and effort to thoroughly understanding the intricacies of your target market and ensuring that your proposed solution addresses a real and pressing need. This foundation not only strengthens your business concept but also increases your credibility in the eyes of potential investors. Equally important is the ability to craft a compelling and persuasive narrative that highlights the transformative impact of your solution and demonstrates its potential for scalability over time.

Also, actively engaging in extensive networking efforts, particularly within local entrepreneurial ecosystems, can open doors to invaluable mentorship opportunities and increase your visibility within the industry. Finally, it is essential to maintain an open-minded approach to constructive feedback and demonstrate a willingness to adapt to changing circumstances or challenges. These qualities of resilience, adaptability, and innovation are highly appealing to investors who seek to support founders with the vision and determination to navigate the complexities of business growth.