top of page

Time to switch-on the second engine. Equality Can’t Wait!

You wouldn’t fly a twin-engine jet with only one engine. Yet, this is what many economies that fail to support female founders continue to do. The economic case for supporting female led enterprises is established. Research found that privately held female led technology firms generated 35 percent more Return on Investment than male led technology firms. In addition, when VC backed, these firms generated 12 percent more revenue[1]. Research has also shown that diverse founding teams with female founders generate at least 10 percent more income[2].

The economic case for investing in female enterprises is further buttressed by the data that women control 70 - 80 percent of all household spending, estimated at roughly $20 trillion in annual consumer spending, with the figure expected to increase to $28 trillion in the next five years[3].

Given the superior financial returns of female founders as well as the strategic importance of women in shaping consumer patterns, the dearth of funding to female entrepreneurs is particularly perplexing. According to pitchbook data, only 2.8 percent of all Venture Capital spending went to female run enterprises in 2019, with the figure dropping to 2.3 percent in 2020. Even when they raise funds, female founders receive $1 million USD less in funding rounds than their male counterparts.

The drivers of the gaps in funding are equally well established. These gaps in funding are driven by the under-representation of female VCs, as well as investor bias and the heightened perception of risk associated with female founders.

Disparities in funding for female founders will continue to constrain growth in economies until they are closed. A recent McKinsey report estimates that African economies alone would gain $316 billion (or 10 percent) in additional GDP by 2025, if they make advances to close the funding gap[4]. In Africa, the importance of closing the gap is acute, given that Africa is the only continent where more entrepreneurs are likely to be women.

The urgency to close this gender finance gap is present now more than ever, with the onset of the COVID-19 pandemic. The pandemic has had a disproportionate impact on female entrepreneurs, with female-led enterprises more at risk of permanent shutdown. A concerted effort to fund female founders who are the 2nd engine of African economies is a pre-condition to putting countries on the path to a robust and resilient recovery.

At the Women’s Enterprise Acceleration Vehicle (WEAV Capital), we believe in the exponential power of female founders and we put our money where our mouth is. Our goal is simple - to back bold founders who are making the impossible possible, and are solving society’s biggest challenges. We don’t just provide funding, we roll up our sleeves and build alongside with our founders. It’s time to stop flying our economies with one engine. #EqualityCantWait

[1] Karen E. Klein, “Women Who Run Tech Startups Are Catching Up,” Bloomberg, 20 February 2013, para. 1, com/news/articles/2013-02-20/women-who-run-tech-startupsare-catching-up. The research was done by Vivek Wadhwa (Singularity University) and Lesa Mitchell (Vice President, Kauffman Foundation). [2] BCG Diversity and Innovation survey, 2017 [3] Michael J. Silverstein, Kate Sayre, “The Female Economy”, Harvard Business Review. [4] McKinsey Global Institute, “The power of parity: Advancing women’s equality in Africa”

63 views0 comments


bottom of page