Only three per cent of African tech startup funding since 2013 has gone to companies with all-female founding teams.
That is according to the “In Search Of Equity: Exploring Africa’s Gender Gap in Startup Finance” report released by research firm Briter Bridges and the World Bank’s Africa Gender Innovation Lab (GIL) based on years of investment data and surveys of a random sample of 172 entrepreneurs operating across the continent.
Its analysis of startup financing deals since 2013 shows that only three per cent of funding went to all-female founding teams, compared with 76 per cent of funding that went to all-male teams. This is disproportionately small as 11 per cent of the 2,400 companies for which demographic information were available are all-female teams. Although investment in the African tech space has skyrocketed since 2013, the proportion going to all-female founding teams has changed very little in that time.
“Female founders are underrepresented in the sectors that attract the most financing. This underrepresentation is partly because there are more male than female founders are also more likely to operate in sub-sectors that attract less investment, such as ed-tech or health-tech,” the report said.
“However, even when they work in sectors with high investor interest, all-female teams are still less likely to receive financing than all-male teams, and they receive smaller amounts if they do receive financing.”
According to the sample of 172 entrepreneurs, male and female founders followed different financing paths. Female founders were less likely to pitch for equity investment than male founders, and more likely to apply for bank loans or to prefer growth from retained earnings.
“Among companies that raised external financing, however, those with all-male founding teams received higher amounts of both equity and debt,” he said.
A confidence gap separates female and male founders in the sample, the report said.
“Female survey respondents showed less confidence in their ability to pitch to investors and in their firms’ ability to grow. This confidence gap is despite the fact that women entrepreneurs in the sample were more educated, had the same amount of professional experience as male founders, and experienced similar revenue changes in the previous year,” it said.