eBusiness Weekly
Women-founded companies in the US raised more money from venture capitalists in 2021 than ever.
Reports indicate they secured 83 percent more funding than the previous year, primarily attributed to the record-setting US$329 billion start-ups raked last year.
But according to data from PitchBook, less than 2 percent of VC funding went to all-women-founded teams in 2021. It’s identical to what’s happening in Africa: Less than 1 percent of all VC dollars went toward start-ups with one or more women founders last year, according to The Big Deal, which details investments in Africa. On the bright side, founding teams counting both women and men as members raised 17 percent of VC investments in Africa in 2021.
These numbers are more frightening when retraced almost a decade back. According to Briter Bridges, another publication that tracks VC investments in Africa, only 3 percent of the total funding raised by start-ups in Africa since 2013 has gone to all-women co-founded teams.
So despite total funding for women-founded companies reaching US$834 million in 2021, per Partech Africa — a VC firm and data tracker of African investments — and the number of women in venture capital increasing, their representation remains minute against a faster-growing percentage of start-ups run by men.
Women-founded start-ups in Africa to have raised $100 million or more are led mainly by white CEOs. Not that it’s any fault of theirs, but the representation of their companies being Africa-based skew funding results in such a way that they don’t capture how much of an enormous feat it is for African women to raise US$1 million.
Before 2021, only a handful (women-led start-ups that raised US$1 million or more with African women as CEOs) had secured that much funding. In 2021, 11 such start-ups achieved that feat, a record year for this group. We spoke with six of them to share their fundraising experiences in a venture capital market that can be unfriendly toward women.
Jessica Anuna, CEO, Klasha
Please tell us what your company does.
Klasha is a technology company that allows international merchants such as H&M or Zara to receive payments online in local African currencies and money methods. African consumers can make payments to international merchants in over five African currencies through the KlashaCheckout; the merchant then receives their payout in G20 currencies.
This allows international merchants to scale into Africa seamlessly through our technology and, in turn, allows African consumers to access global goods and services frictionlessly.
What theories concerning women founders did you have at the back of your mind when starting your company, and did it affect you at the early stages?
I was cognisant that women only received less than 1 percent of venture funding globally, but that wasn’t at the forefront of my mind as I started my journey or as I pitched to VCs or angels. In fact, it wasn’t something I thought about at all, probably because I was new to raising money and didn’t fully grasp some of the biases that existed.
I’ve always been bullish about shipping products that created an impact during my career, so I knew if we had a strong enough product-market fit, we would get funded.
At what point did you begin looking for investors for your company?
Right at the start, our first institutional check was from Techstars in Dubai six months after we started the company. They believed in the team, vision, mission and the opportunity of building streamlined cross-border commerce solutions for African consumers.
The market opportunity was there; e-commerce is less than 10 years old in Africa, with a 3 percent penetration rate and a 27 percent personal consumption rate in Africa, the second-highest after Asia. How did you handle your first “no,” and how has that changed recently, especially with your company raising more than a million dollars?
I got nos right from the start and that was fine. I’d get a no, ask why and affect their feedback if I agreed with it and it aligned with my vision for the company. Today, more VC firms are willing to speak with us, but that doesn’t guarantee additional funding. Some still pass on investment or pass and invest at a later stage or in a different round, which has happened on a few occasions.
There are fewer than 50 women-led tech startups that have raised $1 million or more in Africa. Being one of about 15 last year, what challenges did you face when raising this much as a founder and CEO? Our round closed quite quickly last year, so I think the major challenge was ensuring I did thorough due diligence on each investor and chose funds or angels that could add value to the company and that I wanted to work with. Investors typically deploy large capital into financial-based companies.
Because Africa is currently undergoing modernization and consumer spending and consumption are increasing, conversations with VCs were more streamlined than our previous rounds. Given these biases, do you think more women would get investments if there were more women investors?
Today, only 2.8 percent of women are funded globally. A recent Boston Consulting Group study found that when women-led startups can acquire funding, they’re more likely to be successful than their male counterparts, delivering significantly higher revenue— more than twice as much per dollar invested in the company.
Ultimately, VCs should seek to invest based on whether the company has strong unit economics, TAM and the whether the founding team has true domain expertise in what they’re building. If deals were approached this way more commonly, I believe women would get funded. Most VC firms are required to deliver returns on their investments. Some argue that investing in startups led by men will guarantee such returns, citing examples to back up that claim. Given a few instances of women-led companies doing such in Africa, how have you convinced investors that your business can achieve this?
In my opinion, returns on investment aren’t linked to gender or the notion that there are little to no instances of female-led companies providing 10x returns on the continent.
My current investor pool, which was led by women at Greycroft and Seedcamp, invested because of the opportunity of solving a problem continent-wide and the prospect of facilitating cross-border commerce through modern technology. When raising money, you have to be bullish, respond fast, and ship products even faster, proving traction and market adoption. We have a good product, continued solid month-on-month growth with a growing addressable market and, thus, that yielded investment.
The power of one’s network cannot be overemphasised in the business world. How were you able to utilise yours when it came to securing funding?
I cannot stress how critical a strongly connected network is when raising money. Most, if not all, our funding was raised through strategic introductions to angels and funds through our new and existing investor pool. Today, we leverage our investor network and ask for introductions if we’re raising or want to connect with a fund for future rounds.
In the VC space, it is said that those who hold the money tend to invest more in people who look like them. That’s why women founders are encouraged to transition into angel or VC investing to increase the number of women-led start-ups that get investments. Do you see yourself making this transition?
I strongly believe in paying it forward, and when I have more bandwidth, I will invest in African companies with at least one woman in the C-suite.
Tebogo Mokwena, CEO, Akiba Digital
Please tell us what your company does.
Akiba Digital is a South African-based fintech building an alternative credit scoring infrastructure (basically a new age credit bureau) for small businesses and individuals excluded by traditional credit bureau scores.
I started this company after noticing a massive access problem experienced by thin-file individuals and SMMEs in South Africa, a problem that is prevalent in other countries in Africa. This segment often doesn’t access affordable credit (and other financial services like insurance) and is excluded by high street lenders like banks. And I want to change that.
What theories concerning women founders did you have at the back of your mind when starting your company, and did it affect you at the early stages?
As a Black female technical founder, I got a lot of skepticism about my aptitude and whether my technical skillsets were enough to build a scalable fintech business. When I moved from being CTO to being CEO, I got a lot of skepticism about my business acumen.
Both pushbacks were bizarre because I hold a triple major degree in computer science, genetics and biochemistry from UCT and UCLA, have a solid career as a software engineer and digital consultant from one of the largest asset management firms in SA and McKinsey, respectively. I have helped build a digital bank in South East Asia which scaled to over 2 million users now, before assisting on a build on another successful digital bank in Nigeria. Most male founders don’t have such a track record, yet their aptitude doesn’t get questioned.
At what point did you begin looking for investors for your company?
I only started looking for investors when I had confidence in our business model and needed investment to fuel it to scale. It took us two years of bootstrapping to get to a pre-seed raise in 2021.
How did you handle your first “no,” and how has that changed recently, especially with your company raising more than a million dollars?
Initially, I took nos personally because I assumed it was a reflection of how others viewed my competence. Now, they give clarity on who is right to join us and help us build out our vision and it has nothing to do with me. I believe the right investors will jump in at the right time.
There are fewer than 50 women-led tech startups that have raised $1 million or more in Africa. Being one of about 15 last year, what challenges did you face when raising this much as a founder and CEO?
This is still a crazy statistic given where the African ecosystem is to date.
