International Women’s Day Revives Debate Over Global Funding Challenge for Female Entrepreneurs

From access to education to pay parity and boardroom diversity, much has been done to advance gender equality around the world.

But as the world marks International Women’s Day on Wednesday (March 8) to celebrate “the social, economic, cultural, and political achievements of women,” there is no debate that large gaps remain in the progress towards a gender equal world.

In fact, according to the World Economic Forum 2022 Global Gender Gap report 2022, gender parity is not recovering, and is projected to take another 132 years to close the global gender gap.

Access to venture capital (VC) or funding is a prime example of where a wide gender gap remains, leaving female-founded and led firms with a much shorter end of the funding stick than their male counterparts.

Estimates by the International Financial Corporation (IFC) show that a $300 billion gap in financing exists for women-owned small and medium-sized businesses (SMBs), and remains a major constraint, particularly in developing countries.

Take sub-Saharan Africa, for instance. According to data from the World Economic Forum, there is a $42 billion funding gap for women entrepreneurs, significantly limiting their potential and reducing their engagement on Africa’s startup scene.

It’s a challenge companies like Visa are trying to tackle by giving underfunded women-led startups in emerging markets a much-needed boost.

Visa Foundation, the philanthropic arm of Visa, recently announced that it would commit $1 million out of its $200 million Equitable Access Initiative to help drive the growth of women-owned SMBs in sub-Saharan Africa. The grant money will go to AfriLabs, a pan-African network of over 300 technology hubs, innovators and entrepreneurs, and the female-focused pan-African nonprofit, Graça Machel Trust.

“Women business owners continue to face challenges that are unique to them — ranging from patriarchy, cultural norms and unconscious bias that impacts women’s ability to access markets, finance, technology and networks,” Visa Foundation said in a report. “The global pandemic further exacerbated these challenges as women-led SMBs were hardest hit.”

The World Bank Group Head of the Women Entrepreneurs Finance Initiative (We-Fi) Secretariat Wendy Teleki, also highlighted the impact the pandemic has had on female founders’ access to finance, further exacerbating an already dire situation.

“[What] I find really astounding is that during the crisis, women-led businesses, who generally are more cautious about applying for loans, have had their loan applications rejected at twice the rate of men,” Teleki told PYMNTS, adding that the health crisis significantly reversed the progress made by women entrepreneurs.

From Firm-Level to Ecosystem Approach

The challenges facing Africa’s female entrepreneurs were also raised in a conversation with Janade Du Plessis, general partner at pan-African venture capital (VC) fund Launch Africa Ventures, last year.

According to Du Plessis, the problem can be likened to “capital apartheid” against female founders, who altogether received less than 1% of funds raised by African startups in 2021, representing a meager $18 million out of nearly $2.7 billion.

“Everybody wants to talk about how women should be on boards, involved in decision making and [how] we should fund it. But where’s the money? No one is actually putting capital where their words are,” Du Plessis told PYMNTS.

To help combat the problem, he said Launch Africa Ventures has partnered with WomHub, the largest accelerator for women in science, technology, engineering and mathematics (STEM), to invest $30 million seed funding into up to 80 female startups. “One thing that we will do in the next two years is to demystify this myth that there aren’t enough female tech founders,” he added.

Another Africa-focused VC firm, TLcom Capital, is also doing its bit in closing the gender funding gap.

In an interview with PYMNTS, Maurizio Caio, the firm’s managing partner, spoke about their plans to fix the prominent gender bias in the Africa VC ecosystem in terms of where investor dollars land.

“The only way to have more women entrepreneurs funded is to help women entrepreneurs as investors,” Ciao said, pointing to a partnership deal between TLcom Capital and FirstCheck Africa, a female-led angel fund that aims to back women entrepreneurs on the continent.

But at the end of the day, it will take much more than firm-level initiatives to move the needle on gender equality.

In fact, it will take an ecosystem approach — a mix of education, support, skill building and digital platforms — for women to fully close the diversity and funding gaps in the male-dominated tech and finance landscapes, Payoneer President Keren Levy and Teleki told PYMNTS in a panel discussion.

On the point of support, Levy said a woman who is “plugged into” a senior position can have a strong influence on the DNA of a company, and by extension, the society in which it operates.

And when it comes to the skill-building element, Teleki expressed optimism at the opportunity women have to upgrade their skills by tapping into the deep connections they share with other women.

“Women tend to have stronger networks than men,” Teleki remarked. “They’re deep and personal — but they are not business networks.”

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