Women founders in Africa have access to a new cache of funds as African social startup studio, Janngo Capital, has pledged a €60m Venture Capital fund targeting at least 50% of women-founded startups.
The fund which was unveiled on the eve of Janngo’s participation at the 50th World Economic Forum is dedicated to financing tech startups accelerating progress towards the Sustainable Development Goals (SDGs) in Africa.
Africa boasts of the highest growth rate of female-run businesses in the world. According to The MasterCard Index of Women Entrepreneur,s African countries like Uganda (34.8%) and Botswana (34.6%) have the highest percentage of women entrepreneurs globally.
However, the growth of women founders in Africa is often limited by lack of funds. Currently, there is a $42 billion funding gap for women entrepreneurs in Africa according to the African Development Bank. Accordingly, only 10% of women entrepreneurs are able to raise money from Series A.
However, investment in women-founded start-up has increased. Last year, 13 African startups co-founded by women raised about $1 million in total venture capital according to Briter Bridges’ data. Nonetheless, the challenge of fund raising remains.
The tech sector, just like many other sectors, is male dominated, generally as a result of cultural constraints and stereotypes about the duties of women. This makes it difficult for them to build business sustenance and tenacity that push investors to come knocking.
Also, the large ticket fees for many of these pitch events, a common source of funding for African startups, makes it harder for early-stage women-founded startups to participate and of course, win.
However, Janngo Capital is aiming to bridge gender inequality in accessing funds by dedicating a percentage of its Venture Capital funds to women startups.
According to Janngo Capital’s Executive chair and Managing partner, Fatoumata BA, the gender inequality in the distribution of funds to startups, made them dedicate a percentage of the funds to Women founded companies.
“At Janngo, we believe that talent is equally distributed between men and women but opportunities aren’t; especially in terms of access to capital. That is why we are proud to be a female-led VC fund investing 50% of our proceeds in startups founded, co-founded by or benefiting women ‘’
Fatoumata BA, Executive Chair of Janngo and Managing Partner of Janngo Capital
Janngo’s special provision for women founders, while not the first of its kind, could lead the way in making more venture capitalist opt to invest in female-owned startups.
Lack of capital is not the only challenge bedeviling women-founded startups in Africa as they also lack access to a robust support and mentorship network. According to inc., over 48% of female founders report that a lack of available advisers and mentors limit their professional growth. A fund like this could also help expose these women founders to much needed guidance.
Despite these challenges though, women are slowly gaining ground in the tech startup world as 13.3% of start-ups that raised over $1 million in 2019 were women founded. However, there is still a long way before equality can be achieved in this sector.
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