Female-founded ventures continue to attract less investment as African funding raised by female startups recorded its lowest six months in the first half of 2023.
Africa investment tracker ‘The Big Deal’ in its recent report said “Single female founders and exclusively-female founding teams raised just $22 million in equity funding in H1 2023, the lowest 6-month number since H1 2021,” revealing the challenges that female founders continue to face.
The report said, 98 percent of the funding went to start-ups with at least a male (co-) founder and only 21 percent was invested in start-ups with at least a female (co-) founder in Africa.
While 22 percent of the equity funding on the continent went to exclusively female-founded start-ups, and 7️9 percent to their exclusively male-founded counterparts
“Female-founded ventures in Africa continue to be heavily underfunded,” said Max Cuvellier, Head of Mobile for Development, GSMA who co-authored the report.
According to Big Deal, given the significant drop in funding raised by their male counterparts as well (still $800m+ in total), the relative share of total funding raised by female-founded ventures went ‘up’ from 1.5 percent in 2022 to 2.2 percent in H1 2023.
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In the past 12 months (H2 2022 + H1 2023), start-ups with a single female founder or an exclusively-female founding team raised $48 million in equity funding, an 18 percent year-on-year decrease.
On the other hand, the total equity funding raised by start-ups in Africa between July 2022 and June 2023 was $2.1 billion. Notably, this is a much larger amount than the $48 million raised by female-founded ventures during the same period.
when compared to their male counterparts, there is still a substantial gap in funding. In June 2023, male-founded startups raised $1.8 billion, as against the $4.7 billion they secured in July 2022.
“The proportion of funding raised by start-ups with a male founder or at least a male co-founder went ‘down’ from 99 percent to 98 percent between the two periods,” it reports.
“While the proportion of funding raised by start-ups with a female founder or at least a female co-founder (therefore including gender-diverse founding teams) decreased slightly though, from 17 percent to 16 percent, due to historically poor results for gender-diverse founding teams in H2 2022,” it said.
A further breakdown of the report said the gender investment gap, which was at an alarming 56x in 2022, witnessed a notable reduction to 36x in the first half of 2023. This is the lowest gap recorded in the past four years, signifying progress in closing the gender disparity in funding opportunities.
Experts noted that despite the challenges and disparities that persist, the positive momentum seen in female-founded ventures provides hope for a more inclusive and diverse startup ecosystem in Africa.
“Various initiatives aimed at promoting gender equality in entrepreneurship and investment are gaining traction, and investors are becoming increasingly aware of the untapped potential that female-led businesses hold,” they said.
