Women-led start-ups shine despite a tough funding year

Funding for female founders was concentrated in the seed stage

In Summary

• Investment in African women-founded and led startups remains a bright spot in a global ecosystem drained of funding

Illustration of a women-led business
Illustration of a women-led business

Africa’s women-led startups retained their sparkle through 2023, against the backdrop of one of the darkest periods for global startup funding. They raised $200 million, a 7 per cent growth over the previous year, according to a report from Africa: The Big Deal.

In 2022, these female-founded ventures had grown by 4 per cent. The amount remains significantly lower than the $2.7 billion raised by their male counterparts, but the almost doubling in growth during such a difficult time indicates a growing interest in women-led startups from investors.

“Though it remained small, the absolute amount and share of funding going to female-led ventures did grow in Africa last year compared to 2022,” said Africa: The Big Deal Co-founder Max Cuvellier in their latest analysis.

However, funding for female founders was concentrated in the seed stage, where they represented 20 per cent of startups, raising from $100,000 to $1 million, a significant increase from 13 per cent in the previous year.

In the $1 million-plus deals, female CEOs raised $6.4 million, a marginal increase over the earlier period. While the percentage of women founders decreased as the stages increased, there was still some growth higher up, with 7 per cent recorded in the $10 million+ category, also up from 4 per cent in 2022.

Sabi, a Nigerian e-commerce startup, signed the largest deal by a female CEO with Series B funding of some $38 million.

This growth trend is also highlighted in reports by Partech and Disrupt Africa, showing funding to startups with at least one female founder growing from 20.2 per cent in 2022 to 26.3 per cent in 2023.

“Signs of improvement, then, but there is still a long way to go before we will see funding parity from a gender perspective,” said the Disrupt report.

The Partech analysis shows Kenyan female-founded startups led raising 25 per cent of the total amount raised by female founders in Africa.

However, this is a significant drop in the share of funding going to Kenyan women founders. The country accounted for 41 per cent in 2021 and 61 per cent in 2019.

Tunisia and Ghana are frontrunners of growth in this respect, with female-founded startups representing 38 per cent of all deals in both of those countries in 2023.

According to the Partech report, Kenya ranks fourth after Morocco’s third-place 35 per cent share.

Next in the top 10 are South Africa, Egypt, Nigeria, Rwanda, Senegal and Cote d’Ivoire respectively.

The e-commerce sector accounted for the most of women-led venture funding rounds, capturing 22 per cent of all funding. While fintech ranked second, securing 19 per cent, that contrasts with a larger 24 per cent slice of the overall startup funding pie.

On the other hand, funding for women-led ventures in the health-tech sector commanded a larger proportion (16 per cent) of funding for female-led companies over funding for all companies (11 per cent), according to Partech.

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