FHFH Series: When Being A Female Founder Is A Fault In Funders’ Eyes
This is “Founders From Hell, Funders From Hades” – a safe space where startup founders and funders bare it all like never before. Watch this space weekly for real accounts of funding and fundraising gone wrong.
In this week’s edition, I got in touch with Angie Madara, the Founder and CEO of Kenyan edtech startup, Growd, who’s put in a dozen years in tech. And that has meant a lot of run-ins with gender bias.
Enjoy the read!
“Will your situation as a mom of two kids be a hindrance to your ability to execute the business objectives?”
Of the USD 725.6 Mn in venture capital (VC) funding that was poured into African tech startups in 2018, only 2 percent of that sum reached female-owned or female-led businesses. And many times, it’s down to questions like the one quoted above.
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Actually, those are the words of an individual who Angela “Angie” Madara thought of as a potential investor at the time. That was until talks with said investor served her with what she considers one of her most unpleasant fundraising-related experiences, ever.
Angie is the Founder and CEO of edtech startup, Growd, which has offices in Nairobi and London. Since May 2019, she’s put in work as a professional and as a parent towards creating an environment where children would enjoy and genuinely love learning.
Growd works with parents of children below the age of 14 years to find, design, and match them to co-curricular activities such as music, sports, and arts that improve children’s academic performance in Mathematics, English, and Science.
A year past launch, Growd has completed a successful pilot and is now home to over 400 providers offering more than 450 activities, with hundreds of families connected and growing rapidly.
That’s one of the upsides of putting in good work, just getting to see the results materialise. But getting the job done is hard, and perhaps twice as hard if you’re a woman trying to cut it in the testosterone-charged tech world.
Gigantic gender gaps
The question that set the tone for this article is taken from a real-life encounter which Angie probably prefers not to recall.
Male founders pitch investors all the time and almost never have to explain that they can actually have a life outside of being a father and a spouse. But apparently, female founders are held to a different standard.
At various times in her 12-year-old career as a digital product expert whose done work in fintech, agritech, healthtech, and now edtech, she’s had one too many experiences where the merit of her entrepreneurial ability is weighed against her commitment to family.
“It’s always an unpleasant experience when a potential investor starts asking whether my situation (being a mom of two kids under 5 years) would be a hindrance to my ability to execute the business objectives. I know for a fact, men are not asked this question,” she tells me.
But that’s probably the least of the most troubling bits, it gets worse. Sometimes, being a woman is the only reason for being overlooked by investors.
How wide is the gender gap?
In Angie’s case, there’s that one time things got really troubling. Getting overlooked and undervalued for no justifiable reason is one thing. But seeing another founder get the approval and the cheque mostly for being male, even though he has no product, has a different sting.
“I once attended a pitch competition and the only remark that I got from a potential investor was that I was asking for too much money – £170k (mind you, I had an existing product, customers and revenue coming in),” she recalls.
“My pitch was followed up by a gentleman who had no product or even a waiting list. He was asking for £1.9M, not only was he not asked any questions about his funding needs but he got some investments at this event plus won the pitch competition.”
Gender discrimination in business is a real problem, and it extends beyond tech. The African Development Bank (AfDB) estimates the funding gap for women entrepreneurs across business value chains in Africa to be USD 42 Bn.
On the African tech startup scene, gender disparity manifests in different ways. In South Africa, one of Africa’s largest tech hubs, it’s estimated that since 2018, the percentage of angel and VC funding that has gone to South African tech startups founded by women is as little as 4.5 percent.
In 2019, out of 98 African startups that raised over USD 1 Mn, only 13 were co-founded by women. Of the 13, only four had women-led teams.
This financing gap has major consequences on the ability of female tech entrepreneurs to grow and scale their businesses, as access to sufficient financing is one of the most critical factors for a growing company.
From the survey carried out by The ONE Campaign and CGD on Nigerian tech firms in 2019, it was communicated that “women who own or manage tech firms often face discrimination, especially in financial markets where lenders are reluctant to do business with them.”
An excerpt from the said report reads thus: “One owner of a fintech company decided to stop attending investment meetings, as she believed that investors related better to men. A founder of a leading tech organisation told us that negative stereotypes associated with female programmers are also an impediment to women entering the tech sector.”
This, yet again, highlights the unpleasant trend of women entrepreneurs being neglected by a tech ecosystem that is unfairly biased towards male entrepreneurs and seemingly rigged against anyone who isn’t of the menfolk.
In other news
In this interview, Angie also mentioned a few instances of fundraising efforts that were dealt a coup de grace because of what she deems a mindset and attitude deficit on the part of the funder.
She remembers an occurrence where she had to take a step back because a potential investor was putting an inordinate amount of interest on the bottom line.
“My biggest red flag would be if all what interests the investor is money,” she says. “I once had a chat with an investor who actually stopped from talking about my company’s product, impact and vision, and then went on to ask a million questions regarding my bottom-line. I knew we would not be compatible.”
And then, there’s the quick brush with that other funder who Angie says had very limited knowledge of the African market, but was too brash to even realise it.
“His understanding of the African market was simply not accurate and simply offensive and I did not care to continue with the discussions.”
Having dealt with all these issues, Angie says she can now spot problematic investors from miles away and now steers clear of those ones who come off as generalists; those ones who simply don’t get the edtech sector in Africa or its potential.
“I always feel like I have to use too much effort to first convince them that edtech is a viable sector then follow this up by convincing them that my business is a viable business. Most often than not, I will not be able to secure a second meeting but maybe it’s for the best,” she says.
For her, the ideal funder is one that has invested in edtech before and has knowledge of the African context.
She emphasised entrepreneurs who have successfully exited their businesses and specialist edtech funders as the embodiment of investors that she considers a no-brainer.
However, Angie recognises that building a connection with these types of funders requires a lot of time and effort because, according to her, there are very few of them.
African startup founder or funder who fancies a feature on this “not-boring” series? Please reach me via [email protected]
