Are you a woman-owned start-up? Here's how to get funding
For women who seek startup funding, the crucial question remains: Do investors actually need the innovation you're offering?
What you need to know:
- Dr Elizabeth Wafula is growing a business, processing legume-based products.
- Despite challenges including securing funding, she persevered and her start-up secured investment after participating in entrepreneurship programs.
- Investors are keen on start-ups that can be commercialised swiftly.
- Women founders are encouraged to incubate their ideas with programs that will help them grow.
When Dr Elizabeth Wafula envisioned her future, she dreamed of owning a company like Unilever. However, it took her nearly a decade to take the initial steps towards realising her entrepreneurial aspirations.
“I was doing my master’s when I developed a product from mangoes under the guidance of one of my professors. Later, during my PhD proposal, I realised the market potential for quick-cooking beans.
“The idea of entrepreneurship solidified during a career development workshop in Belgium. My passion for developing nutritious products and reducing post-harvest losses led me to pursue these business ideas,” she shares.
Now a lecturer in food science and technology at the Jomo Kenyatta University of Agriculture and Technology, she is in the process of growing a business in processing legume-based products. Her aim is to provide nutritious foods at affordable price points for the mass market in Kenya and beyond.
“When I say legume-based products, I mean products largely made out of beans, cowpeas, or green grams, often combined with other plants like cereals such as sorghum or soya beans. These are products that can be prepared in 15 minutes without the need for soaking or boiling for hours.”
Dr Elizabeth Wafula, a lecturer at the Department of Food Science and Technology, Jomo Kenyatta University of Agriculture and Technology. She shares her journey on how she got funding for her plant-based food products business.
She is also developing snacks containing legumes, aiming for healthier options in the market. Elizabeth was able to do this because she secured funding for her start-up, enabling her to develop her products and introduce them to the market.
“Setting up a business in Kenya is expensive," she says.
"Building a food factory is costly, not just in Kenya but globally. The expenses vary based on the size and scale of the operation, ranging from small-scale to large-scale facilities. Importing high-performing equipment adds to the costs, along with taxes associated with equipment imports."
She also notes that the policy environment for entrepreneurs in Kenya isn't the most favourable. Local companies often face challenges compared to foreign competitors who get tax breaks.
For women, there is a distinct timeline for transitioning into entrepreneurship compared to men. They often face the challenge of balancing multiple responsibilities, such as familial duties, which can delay their entry into entrepreneurship.
In Elizabeth's case, life changes, such as a separation, occurred during her PhD studies. This made it particularly difficult for her to set up her business, finish her PhD and take care of her children alone. Despite these challenges, she persevered, struggling to complete her PhD and also working on setting up her business.
Not many women are fortunate to get this opportunity. In Kenya's burgeoning start-up landscape, male entrepreneurs take centre stage, overshadowing their female counterparts.
Recent data reveals a stark gender gap, with only 16 per cent of funded start-ups in the past year being led by women, according to the Venture Capital in Africa Report 2023.
It was also revealed that only 36 unique female-founded start-ups successfully raised venture capital, capturing just 7.0 per cent of deal volume ($4.5 billion) for the last year.
Family responsibilities
Last year’s figures represent a mild improvement from previous years, with a 5.0 per cent increase from 2020, where only 11 per cent of female-headed initiatives were funded. This disparity raises critical questions: Are there insufficient women-led start-ups, or are they facing systemic barriers in accessing funding?
In a panel discussion hosted by the Mawazo Institute on Investing in Women Innovators, key industry players offered insights to women on how they can access funding for their start-ups.
Dr Pamela Mreji, the director of the Centre for Innovation and Technology Transfer at the Technical University of Kenya, emphasised that since innovations are socially constructed, women need the right tools to access funding.
“Funding isn't granted solely because you're a woman; your project undergoes the same screening process as a man's. Women must enhance their capacity through training.
"Since structural challenges, like family responsibilities, hinder women's participation in training, the industry can implement quotas, such as reserving 30 per cent of funding for women and vulnerable groups. This will give them an extra push,” Dr Mreji stated.
Male innovators
Dr Susan Musembi, a lecturer at the Department of Biochemistry at Kenyatta University, encouraged women to disclose their innovations to get funding.
“We have women engineers and scientists, but the number who disclose their ideas is not even half of what male innovators disclose,” she said.
After disclosing, women are advised to ensure their innovations address a problem.
Drawing on her extensive experience, Sarah Kanda, a manager at Global Energy Alliance for People and Plant, asked women to evaluate the impact of their innovations. Is it truly impactful and aligned with market demands? This assessment is essential for attracting investor interest and securing financing.
“The crucial question remains: Do investors actually need the innovation you're offering? Consider whether your solutions align with the real needs of the target market, as this greatly influences financing opportunities. Often, academic research lacks immediate market solutions. Investors prioritise ventures with current market relevance rather than future potential. Therefore, securing funding becomes challenging for projects that don't meet this criterion,” Ms Kanda stated.
Dr Mreji added: “There is revolutionary and evolutionary innovation. Investors are keen on those that can be commercialised swiftly. It's crucial to identify current challenges and swiftly adapt solutions to address them. Additionally, conducting more impactful research can further enhance our efforts to meet market needs effectively.”
For their start-ups to succeed, women founders are also encouraged to incubate their ideas with programs that will help them grow.
“I participated in programs like the Delta 40 Venture Capital Studio, which provided seed funding to refine business ideas. Additionally, my background in sustainable technologies and product development equipped me for entrepreneurship. However, it took time to overcome doubts and gain stability before making the leap into entrepreneurship,” Elizabeth says.
As for women looking to take the leap, Elizabeth advises: “Don't let perfectionism hold you back. Start with a minimal viable product or service to solve a problem quickly. Secondly, pursue your dreams despite challenges and societal expectations. Lastly, seek support from like-minded women and consider partnerships to grow your business.”
