One of the first women to make the list, Annette Campbell-White, has been cited as an example of discrimination in venture capital. She was mentioned in the Midas List for three consecutive years, from 2005 to 2007. She claimed that a number of firms in the 1980s ignored her senior management experience in Hambrecht & Quist. In addition to finding that women make up the majority of early technology adopters, Harvard Business School Professor Paul Gompers has stated that female venture capitalists consistently perform as well as males at large firms that have more than one woman.
Questions about how to increase the number of VC opportunities for women have been brought to the forefront by several events.
Venture capital is a type of financing that is provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both).
The number of women founders and co-founders in Africa is on the rise, according to research by Venture Capital for Africa (VC4A), an online community for startups. In 2019 that number was still just at 18 per cent , or fewer than one in five—but it’s still better than in supposedly more “advanced” startup hubs like Silicon Valley.
Fortunately, African hubs don’t have to replicate the flaws of more mature markets. Several female African leaders in the tech and finance space are taking matters into their own hands.
In Africa, there’s a $42 billion funding gender gap across the board, according to the African Development Bank and even when there is funding it’s often micro-financing with “small amounts and big interest rates. The funding gap is particularly striking as research from sources including the Global Entrepreneurship Monitor shows African women are easily the most entrepreneurial in the world, with a rate of about 26 per cent of the female population aged between 18 to 64. While some of that might come out of necessity with a lack of formal jobs, a key feature is the lack of funding for these female-led businesses.
Last year, Alitheia Capital launched a gender fund led by veteran investor Tokunboh Ishmael, with a target of between $75 million to $100 million for women entrepreneurs.
“Female fund managers are also more likely to invest in and have access to female founders through networks male fund managers may not have access to,” explains Barbara Iyayi, a fintech growth equity investor. “These expanded networks give rise to more opportunities that increase the quality of deal flow and opportunities to make strong returns, particularly in Africa where the diamonds in the rough are not easily noticeable.”
Ultimately, fund managers will always have a fiduciary responsibility to achieve the best possible returns for their investors but focusing on female founders won’t be an impediment to achieving those targets in a more level playing field.
In fact, there’s an argument to say better gender-balanced tech ecosystems across Africa with more female engineers, executives, board members and fund managers will do more than just match previous levels of return. “Such an ecosystem would yield more scalable, impactful companies and in return, more exits and stronger commercial returns,” says Iyayi.