Time to bridge gender gap in start-up funding
The gender disparities in the African start-up scene are no longer news.
In spite of the numerous studies that indicate that women-led start-ups make better investments with higher returns in the long run compared to male-led start-ups, enterprises that are led by women continue to attract dismal funding compared to start-ups led by their male counterparts.
According to the Africa Investment Report 2022 published by Briter Bridges, of the US$4.8 billion raised in disclosed funding in the year 2022, only 2.8 per cent was apportioned to all-female start-ups.
It is also sad to note that this statistic has remained largely the same over the past 10 years, despite numerous efforts to support more female entrepreneurs.
Researchers have attributed the low investment in female-led start-ups to a number of reasons, including the bias some investors have against female start-up founders.
It starts as early as the pitching process, where women lose out at the very beginning of the fundraising process. A particular 2014 study showed that “investors prefer pitches presented by male entrepreneurs compared with pitches made by female entrepreneurs, even when the content of the pitch is the same”.
Female founders have also reported instances where investors wrongly assumed the women to be less knowledgeable on the subject matter, even in cases where the female members were the most technically adept among the team members.
Lack of confidence or the ‘confidence gap’ has also been touted as another reason why women entrepreneurs could be falling behind.
Research has shown that while male entrepreneurs tend to ‘oversell’, ‘overvalue’ and ‘overpitch’ themselves, women entrepreneurs downplay their abilities and undersell themselves, which works against them in the long run.
So, how can we get more women into the funding stable? We all know by now that a good idea alone cannot attract funding. It has to be accompanied by a compelling and memorable pitch, one that is delivered confidently, leaving no room for doubt.
This is why any business training and mentorship programmes specifically targeted at women entrepreneurs must have a very important component on ‘How to sell yourself’.
We must disabuse women entrepreneurs of the false modesty syndrome that leads them to downplay their own abilities and achievements in a bid to appear humble. It has been proven not to work and people actually believe you are not as good as you falsely lead them to believe.
I understand that it is difficult for women to broadcast their achievements and abilities without coming off as arrogant or boastful.
However, the world of venture capital and entrepreneurship requires you to shamelessly tell your story, documenting every success — big or small — and learning to be your greatest advocate.
It means taking charge of your own story and leveraging every means available — the media, social media, LinkedIn, friends and networks — to shout about your start-up because you never know who might be watching.
So, to female entrepreneurs reading this, remember this, nobody can tell your story better than yourself.
Dr Chege is a media researcher