Why Women are Still Not Raising Finance Equitably in 2023

In 2019, the International Financial Corporation (IFC) published a report highlighting a significant unmet financing demand of $49 billion for female founders in South Africa. This underscored the existence of a massive female-founder financing gap in the country.

Research on “Why Female Founders are Still Not Raising Financing Equitably in 2023”

Future Females Empowerment Initiatives, in partnership with the International Tech Hub Network, conducted research to investigate the barriers faced by female founders in raising funding and the reasons behind the persistent funding gap. The study involved surveys with open-ended and multiple-choice questions and covered five International Tech Hubs: South Africa, Brazil, Kenya, Indonesia, and Nigeria.

Three Key Questions Addressed by the Research

The research aimed to answer three essential questions:

1. What is the current financing gap for female founders globally?
2. What are the barriers faced by female founders in raising funding?
3. Why have existing interventions targeting these barriers been unsuccessful?

The Funding Gap for Female Founders Across the Five Countries

The research revealed that female founders in the surveyed countries were primarily relying on bootstrapping to keep their businesses operational. On average, they had raised less than $10,000 to date. Despite actively seeking funding, 95% of female founders struggled to identify funding opportunities and connect with them. They lacked familiarity with the fundraising process and its requirements.

Key Barriers Faced by Female Founders in South Africa

The research identified the following key reasons that contribute to the funding gap experienced by female founders in South Africa:

1. Lack of Comprehension of the Fundraising Process

Only 19.5% of female founders surveyed reported confidence in their ability to navigate the fundraising process. A higher percentage (46%) in Kenya expressed confidence, but most founders still indicated needing help with various aspects of the fundraising process. Approximately 30% of female founders admitted that they cannot go through the process alone and require assistance with grant proposal writing and pitching.

2. Lack of Information on Investors

There is a significant gap in information about funding opportunities available to female founders and the types of investors to approach. In South Africa, 42.1% of female founders reported not knowing relevant investors to approach, which increased by 29.4% from Brazil. Additionally, 39.6% of female founders stated that they stick with their current form of funding simply because they don’t know how to access any other forms of funding, despite expressing a willingness to explore other options.

3. Experienced Gender Bias

While there was no explicit evidence of gender bias in the survey, 71.7% of South African female founders felt that the fundraising process was more difficult for them because they are women. This percentage was higher in Indonesia, where 45.6% felt gender bias was a factor. Furthermore, 13.2% of female founders in South Africa identified their biggest challenge as investors not taking them seriously.

Addressing the Funding Gap: Solutions and Multi-Dimensional Approach

The research emphasized the need for educational programs to bridge the gap in female founders’ understanding of the fundraising process. It highlighted the importance of a multi-dimensional approach, involving female founders, startups, SME enablers (e.g., incubators, accelerators), and investors.

The proposed solution involves integrating these stakeholders to facilitate the flow of information on funding opportunities between investors and female founders. Enablers act as binding agents, providing training on fundraising processes and facilitating investor-founder matchmaking.

Future Females’ Commitment

Future Females, as an education platform, expressed their commitment to supporting women and working with partners to educate women in the fundraising process. They also welcomed collaboration with any partner who shares the goal of closing the funding gap and empowering female entrepreneurs.

Cerina Bezuidenhout, co-founder, and COO of Future Females: “After receiving repeated feedback about funding from our community, we were very excited to finally explore why – after so many efforts from the entrepreneurial ecosystem, there is still a gap between male and female funding. We are delighted to share the findings with everyone, and specifically the key players in the field – the startup enablers, the entrepreneurs themselves, and the different funders – banks, grants, investors. May everyone who reads this, feel they know better now how to close this gap. Future Females vouch, as an education platform, that we will support women and work with partners, to educate women in the fundraising process, and we are happy to work with any partner who shares this goal.”