Despite more money than ever flowing into Africa’s tech and business sectors, women-led startups are being left behind. New data shows that the funding gap between men and women is not only large—it is getting worse.
In 2024, less than 5% of all start-up funding on the continent went to companies with a female Chief Executive Officer (CEO). This is a drop from 5.6% between 2019 and 2023.
The situation is even more difficult for all-women founding teams. Only 1% of total funding went to start-ups founded entirely by women. That is down from 2.1% in previous years. Meanwhile, only 9% of funding went to teams that included at least one woman—a sharp drop from 17% before.
Women Deliver Better Returns, Yet Receive Less
This lack of funding is not because women-led businesses perform poorly. In fact, research shows the opposite. According to data from PitchBook and Africa: The Big Deal, female-founded companies generate higher revenue for every dollar invested. They deliver 2.5 times better returns than companies founded by men.
Experts now say the problem is not about ability. It is about structural bias—meaning the way the investment system is built makes it harder for women to succeed.
A Few Exceptions, But Not Enough
While the overall picture is troubling, there are a small number of women leaders who have broken through. Carrol Chang, the new CEO of Andela, is the only female CEO among the top 30 most-funded start-ups in Africa.
Other notable female leaders include:
· Cikü Mugambi of Kobo360
· Anu Adasolum of Sabi
· Belinda Shaw of Cape Bio Pharms
These women are succeeding against the odds, but they remain the exception, not the rule.
Image source: Seedstars.com
Why Women-Led Startups Receive Less Funding
Over the last 20 years, researchers have identified several reasons why women struggle to get business funding. Below are the most important factors.
1. Bias In The Investment Community
Many investors hold unconscious beliefs about what female entrepreneurs can or cannot do. This lack of confidence affects funding decisions. Women also often lack access to the same professional networks and resources as men—connections that are critical for securing investment.
2. Funders Prefer People Like Themselves
Studies show that investors naturally prefer to back people who share their own traits. Since most investment decision-makers are men, they tend to support male entrepreneurs. In the UK, only 13% of capital allocators are women. In the US, that number drops to 9%. In Africa, the situation is similar. Investors also rely heavily on trusted referrals from their own social circles, which puts women at a disadvantage.
3. Masculine Traits Are Wrongly Linked To Success
Researchers in the United States and Europe have found that investors often see female entrepreneurs as lacking key traits like leadership, risk-taking, experience, perseverance, and financial knowledge. This belief may come from old leadership theories that linked success to dominance and competitiveness—traits often labelled as masculine.
Modern research has proven that these traits are not linked to real leadership success. However, the perception remains. Even some women have come to believe that male traits are necessary for business success, which may make them less confident when seeking funding.
Interestingly, one famous study found that venture capital investors do not openly discriminate based on gender. Instead, they show a negative bias against traditional feminine traits—such as warmth or modesty—during pitches.
4. Male-Dominated Social Networks
Women are often left out of the informal networks where funding deals begin. Male entrepreneurs tend to connect more easily with male investors. On average, women have smaller and less powerful professional networks. This limits their access to external financing. Some researchers have suggested that women should adopt masculine traits to fit into these networks—but many argue that this is not a fair or practical solution.
5. Bias Against Women-Centred Products
Another reason for the funding gap is that investors often dismiss products and services designed for women. Even when these products have large market potential. Female entrepreneurs are also more likely to start businesses in sectors like retail and personal services, which are often less capital-intensive. Some of the funding gap may be explained by women needing less money—but bias still plays a major role.
See a Related Post: How African Startups Can Attract Funding in a High-Risk Market
The Way Forward: What Must Be Done To Address The Gender Gap In Startup Funding
To fix this imbalance, several concrete steps are needed across Africa’s start-up ecosystem.
1. Educate Investors
Investment firms need training on the strong performance of female-led ventures and the business benefits of diversity. Changing perceptions can lead to fairer funding decisions.
2. Provide Mentorship and Support
Female entrepreneurs need access to experienced mentors who can help them navigate the challenges of building a business and raising capital.
3. Introduce Supportive Policies
Governments and regulatory bodies across Africa should create policies that promote gender diversity in entrepreneurship and funding. This could include funding guarantees, tax incentives, or requirements for diverse investment panels.
4. Build Inclusive Networks
We must create professional networks that actively include and support women. These networks should connect female founders with investors, mentors, and peers who can help them thrive.
A Call To Action
The current state of funding for female-led start-ups in Africa is deeply concerning. It is good news that more investment capital is flowing into the continent. But it is bad news that so little of it is reaching women.
African women entrepreneurs are already delivering strong results with very little support. Imagine what they could achieve with fair access to funding. By addressing the biases and barriers that exist, we can build a more inclusive, fair, and prosperous start-up ecosystem across Africa.
