Accelerating Action: Rethinking Investment Strategies to Close the Gender Gap in Africa’s Venture Capital Funding Flows
Africa’s startup ecosystem has experienced exponential growth, with investments soaring from $185 million in 2015 to $3.2 billion in 2024. Yet, despite this boom, solo female founders and all-female founding teams secured just $21 million last year, —a fraction of the $430 million raised by solo male founders and the $1.6 billion accessed by all-male teams. This stark contrast is not just an oversight—it is a systemic issue that demands urgent, strategic, and collective action. Write Damilola Teidi and Dolapo Morgan.
One factor that is important to consider when discussing the gender funding gap is the pipeline of women-led technology companies positioned for venture capital investment. The number of female founders in high-growth sectors is closely linked to gender disparities in STEM education, which shape access to technical skills, networks, and entrepreneurial pathways.
Research by UNESCO shows that while women represent 30% of science and technology researchers globally, their participation in engineering and ICT fields remains significantly lower. In Africa, only 18% of ICT graduates are women (UNESCO Science Report, 2021), which has implications for the sectors where female-led startups emerge.
A report by the African Development Bank (AfDB) notes that only 10% of funded startups in Africa have at least one female founder, and the majority of them operate in sectors outside deep tech, fintech, and enterprise SaaS – industries that tend to attract the highest VC investments.
However, even when women-led startups break into high-growth sectors, funding remains a challenge. According to the 2024 Beyond the Noise report by Briter Bridges and V54 Open Impact and the UK Government’s International Tech Hubs Network (ITHN),while there has been an increase in the number of investment deals involving women entrepreneurs, their overall share of venture capital funding has declined.
The data points to a troubling pattern in major African markets. In South Africa, women-only teams received less than one percent of total funding, while in Nigeria, funding to women-led startups remains disproportionately concentrated in the health and edtech sectors.
However, even when women-led startups break into high-growth sectors, funding remains a challenge.
Kenya, however, stands out as an exception. Thanks to deliberate efforts to integrate women-led startups into broader commercial funding pathways, the gender funding gap has narrowed significantly. Kenya’s progress demonstrates that diversifying investment sectors and aligning grant funding with equity opportunities can effectively expand market access for female founders.
Beyond the challenges of access, another key issue that came to light in the report, is the reliance on grants as a primary funding source for women-led startups, which often fails to translate into commercial investments, especially for women-led startups. The recent Beyond the Noise report, which we contributed to, highlights the systemic factors that perpetuate this gender gap. Despite increased global awareness, biases in the investment process and structural barriers continue to limit funding for women entrepreneurs.
The Business Case for Investing in Women
Investing in women is not just about gender equity; it is an economic imperative. Research consistently shows that women-led startups generate strong financial returns. A 2018 report by BCG found that for every dollar invested, women-founded businesses return 78 cents, compared to just 31 cents from male-founded startups. The World Economic Forum estimates that $28 trillion could be added to the global economy if women participated at the same rate as men—equivalent to 26 percent of annual global GDP.
Despite this clear economic opportunity, biases against women-led businesses persist. While it is unrealistic to claim that women founders are inherently safer bets, data consistently shows that when given the right resources and opportunities, women are equally bold disruptors. The real challenge is breaking through investment biases and building a more equitable funding landscape.
Reshaping Venture Capital Strategies
Addressing the gender funding gap requires a fundamental shift in how investors approach capital allocation. Venture capitalists must go beyond rhetoric and actively implement strategies that create a more inclusive investment ecosystem.
One critical area for change is grant-to-equity transition planning. Research shows that grants have been the predominant source of funding for women-led startups. Across the three markets studied in the Beyond the Noise report, 61 percent of funding for women-only teams comes from grants, compared to 31 percent for men-only teams.
However, this reliance on grants has not translated into an increase in commercial funding. Women founders are less likely to raise follow-on investment after receiving grants, and those who do are more likely to receive additional grants rather than equity or debt financing.
To shift this dynamic, venture capital firms can leverage grants as a bridge to commercial investment rather than viewing them as indicators of weak commercial potential. At the same time, grant-giving organizations must ensure that their funding structures align with long-term sustainability and commercial viability.
One way to achieve this is by standardising reporting structures between grant providers and venture capital firms, ensuring that founders are tracking key commercial growth indicators from the outset.
The real challenge is breaking through investment biases and building a more equitable funding landscape.
Another area for transformation is market access and network inclusivity. Women-led startups often struggle with visibility in investor circles, limiting their ability to secure funding. Venture capital firms can take intentional steps to increase the participation of female entrepreneurs in investment-related events, and business networks.
Ensuring that women are not only present but actively engaged in these spaces will help normalize their presence in high-growth sectors traditionally dominated by male founders.
Women-led startups often struggle with visibility in investor circles, limiting their ability to secure funding.
Additionally, increasing female representation within the venture capital ecosystem is crucial. The gender imbalance in VC decision-making roles has a direct impact on funding allocation. When women are part of investment committees, they are more likely to recognize and support strong women-led businesses.
Kenya provides a compelling example of how a robust network of female angel investors has contributed to higher funding rates for women entrepreneurs. Encouraging more women to enter venture capital as fund managers, investment analysts, and ecosystem leaders is essential for long-term structural change.
Data-driven decision-making is another key factor in closing the gender gap. Many investment biases are unintentional but reinforced by a lack of visibility into gender-disaggregated data.
Firms must commit to collecting and analyzing gender-specific funding metrics, tracking investment outcomes for women-led businesses, and identifying areas where biases may be limiting access to capital. Increased transparency and reporting on gender diversity in investments will help shift industry norms and encourage more inclusive funding practices.
At Ventures Platform, we have taken deliberate steps to address the gender funding gap through initiatives like our Levelling VC Initiative, training with the International Finance Corporation (IFC), having more female representation on the team, amongst others. Through our levelling VC initiative, our goal is to increase the share of venture capital allocated to female-led African startups from 13 percent to 25 percent by 2029. However, bridging this gap is not an effort that any single firm can undertake alone. A unified commitment across the venture capital ecosystem is necessary to create lasting change.
What if every major African VC firm committed to increasing its female-led portfolio by 10% in the next three years? This isn’t just an aspirational idea; it’s a tangible target that could change the trajectory of female entrepreneurship on the continent, accelerating growth, innovation, and social impact.
The Role of Female Founders in Shaping the Investment Landscape
While systemic change is necessary, female founders can also take strategic steps to improve their fundraising success. Understanding how venture capital firms operate and refining pitch narratives to emphasize both impact and commercial viability is critical.
Many women-led startups naturally highlight their social impact, but investors are equally interested in scalability and profitability. Demonstrating strong financial projections, market potential, and a clear growth strategy will help attract diverse investment sources.
What if every major African VC firm committed to increasing its female-led portfolio by 10% in the next three years?
Female founders should also explore alternative funding pathways beyond traditional VC, and strategic partnerships that are better aligned with their business models. Building strong networks by engaging with mentors, successful female entrepreneurs, and gender-focused investor groups will also enhance access to capital and growth opportunities.
A Collective Path Forward
The path to closing the gender gap in venture capital is clear, but it requires collective action, strategic commitment, and a shift in investment practices. The responsibility does not lie solely with female founders or a handful of progressive investors. It requires a concerted effort from venture capitalists, angel investors, ecosystem builders, and policymakers to integrate women entrepreneurs meaningfully into the investment landscape.
By shifting beyond token inclusion efforts and embracing long-term, strategic change, the industry can unlock substantial economic growth, drive innovation, and create a more inclusive and prosperous Africa.
The time to act is now.
