Expanding a startup requires financial investment in technology, hiring skilled professionals, and achieving market fit. Many startup founders seek funding from investors, but women entrepreneurs encounter more challenges in securing funds compared to men due to various biases in the venture capital industry and fewer female founders pursuing high-growth opportunities.
In 2024, female CEOs raised significantly less capital compared to their male counterparts, reflecting a significant funding gap. This trend underscores the ongoing challenges faced by female founders in securing investment.
Norrsken22, a growth fund focusing on African startups, has supported several female-led companies in Africa, such as Credrails, a fintech firm led by Pauline Wanjiku Githugu, and Sabi, a Nigerian B2B e-commerce platform led by Anu Adasolum.
An interview with Lexi Novitske, General Partner, and Precious John-Adeyemi, Investment Analyst at Norrsken22, delves into the hurdles faced by female entrepreneurs and how to address the funding gap.
The interview has been condensed for clarity.
What challenges do female founders encounter in securing funding?
Lexi: Networking poses a significant challenge, especially in a predominantly male investment environment.
Precious: Female entrepreneurs often operate in sectors perceived as less scalable by venture capitalists, impacting their access to funding despite leveraging technology in industries like consumer goods, education, or healthcare.
Furthermore, limited networking opportunities make it difficult for women to establish vital relationships for business growth. Encouraging inclusive networks and enhancing female representation in investment decisions are crucial steps to bridge this gap.
How have these challenges evolved over the last five years?
Lexi: The increasing presence of women in investment positions is a positive development. Investors are witnessing successful female-led companies, shifting biases towards a more favorable outlook.
Precious: Progress in acknowledging the funding gap has led to the emergence of female-focused venture capital funds, accelerators, and grant programs. Investors are increasingly supporting female-led businesses, reflecting a positive trend towards gender diversity in funding.
What criteria do venture capital firms typically consider when evaluating startups and how does this impact female-led businesses?
Lexi: VCs prioritize fundamentals like market size, scalability, and team capabilities, which are essential for business growth.
Precious: VCs assess startups based on factors like market potential, execution abilities, and revenue models, which are not inherently lacking in female-led businesses but may be perceived differently due to biases in the investment process. Addressing these biases is critical for creating an equitable investment landscape.
What steps can female founders take to enhance their chances of securing funding?
Lexi: Focus on demonstrating strong traction, customer engagement, and growth potential to attract investors.
Precious: Prioritize revenue growth, unit economics, and scalability to instill investor confidence in the business’s potential for success.
What trends should female founders emphasize to improve their funding prospects?
Lexi: Identify genuine opportunities in stablecoins, supply chain optimization, Pan-African banking, and other emerging sectors.
Precious: Leveraging AI for efficiency and innovation in legacy industries, such as healthcare, presents significant opportunities for female founders seeking funding.
What mistakes should female entrepreneurs avoid when pitching to investors?
Lexi: Ensure pitches are concise, clearly outlining funding requirements, utilization plans, and key performance indicators.
Precious: Female founders should confidently present their vision, market potential, and growth strategies to demonstrate the business’s scalability and revenue-generating potential effectively.
What resources are recommended for women entrepreneurs seeking to enhance their fundraising skills?
Lexi: Engage with local angel networks for pitch refinement and seek mentorship within female-founder-focused communities for valuable support and networking opportunities.
Precious: Community engagement offers significant benefits, providing avenues for pitching, feedback, and connections with potential investors. Leveraging female-founder networks and platforms can enhance visibility and access to funding opportunities for women entrepreneurs.