Challenges for female founders in securing venture capital funding have increased over time. Despite efforts to enhance investor readiness, funding gaps have widened. In 2024, women-led startups in Africa received only 1% of total VC funding, marking a five-year low.
At a recent roundtable event organized by Spurt! and the UK-Nigeria Tech Hub, experts and entrepreneurs discussed the ongoing issue of female founders being overlooked in venture capital. They concluded that the problem goes beyond just preparing women for investors. Bias is ingrained in the system, from due diligence to deal flow, and until investors undergo retraining and revamp their processes, female founders will continue to face exclusion.
Challenges with Investor Gender Bias
Despite claims by gender-lens investors to address bias, there is still a level of cognitive dissonance that perpetuates outdated stereotypes. Discussions at the event revealed instances of biased questioning during due diligence processes, with one example highlighting how a female general partner was judged based on her appearance rather than her qualifications.
Some investors openly express biases, while others silently dismiss women based on superficial judgments without realizing their own biases.
Gender Discrimination in Due Diligence
Structural issues in the due diligence process also contribute to the exclusion of women. Experts at the event discussed how discrimination seeps into investment screening, with observations that men often have more polished pitch decks due to better access to early funding and mentorship.
Participants highlighted the need to train analysts to look beyond aesthetics and suggested removing demographic biases to create a fairer playing field. Additionally, they proposed affirmative action measures to incentivize gender balance in investment portfolios, encouraging fairer funding practices.
Empowering Female Founders
Female founders face challenges in following up with investors after receiving feedback, which could be attributed to confidence gaps or limited access to support. Initiatives like the Lagos State Employment Trust Fund provide technical assistance to help women implement due diligence recommendations and improve their chances of securing investment.
While efforts are being made to reduce biases among investors, women are encouraged to increase their visibility, showcase their growth, and build professional networks to enhance their chances of securing funding.