Capital Questions

An Unspoken Gender And Racial Bias Problem Stifles African Healthtech

By  |  August 5, 2022

In the past year, disturbingly skewed funding trends have persisted, with black and all-female founding teams suffering the most, and perhaps evidently more so in the healthtech sector than others.

Black female founders, for instance, only received 2 percent of all funding in the previous year, despite the fact that the African market for digitized healthcare supply chains has developed significantly over the previous two years, as exemplified by data that suggests funding for local healthtech operations hit USD 78.5 M last year.

There has been significant development and promise in the market, according to a Salient Advisory report on market intelligence. However, the report’s primary suggestions were motivated by the challenges faced by founders of colour, founding teams made entirely of women, and entrepreneurs without ties (to high-net-worth nations) through schooling, marriage, or funding.

The data below shows the harsh realities of discriminatory funding:

  • 56 percent of innovators who raised funds in the last 12 months were black founders, but they combined to raise 13 percent of the total fund
  • In contrast, companies with mixed-race founders (22 percent) combined to raise 59 percent of the total funds. 
  • All-female founder innovators Maisha Meds, Kahsa, One Health, myMedicines, and Medsaf raised USD 7.4 M, albeit a huge chunk of this total was raised by Kahsa and Maisha Meds who are white founders.
  • 79 percent of all types of funding went to startups led solely by men, and 12 percent went to startups with mixed-gender founding teams.
  • More than 82 percent of global investors are men. Due diligence processes have been designed primarily by men for male investors. Hence, women tend to be overlooked by the majority of investors.

All of this begs the question of what black and female business owners need in order to accelerate the growth and impact of their enterprises. How could the needs of, say, enterprises operated by women be different from those of other businesses? How does a lack of funding affect the solutions provided exclusively for women by inventors like Kasha?

Malyse Uwase, a seasoned industry professional and Senior Consultant at Salient Advisory; a healthcare consulting firm offering advisory services to clients who invest in healthcare programmes in emerging markets, recently shared some valuable thoughts from the vanguard on the subject of recommendations for more inclusive funding opportunities with WeeTracker.

WT: Why is the topic of gender and racial gaps in the African healthtech sector important with respect to how things are shaping up and the relevant shortcomings? 

Uwase: The African healthtech sector is growing, making it critical to have homegrown solutions by Africans. Therefore, equity is important, and opportunities need to be made available to all founders, with particular attention paid to women founders since they face more barriers to entry.

Localisation is also important for supply chain resilience and sustainability, hence the need for greater investment in African founders who have more skin in the game and a more natural understanding of the challenges and cultural context.

WT: For context, how is the ‘game’ rigged against certain groups in practice based on your observations and where does the blame lie?

Uwase: Our research demonstrates that founders with ties to high-income countries (HIC) receive more funding. This was magnified in our 2021 report on innovators in the supply chain sector that found the majority of African founders without HICs ties who have received external funding have raised less than USD 150 K.

In stark contrast, the majority of innovators with ties to HICs — through work experience, education, or non-African co-founders who have raised external funding — have garnered over USD 1 M in support. Therefore, receiving education from or garnering work experience in HICs, and having nationals from HICs as founders or co-founders on the team, can play a key role in facilitating access to global investor networks.

This apparent fundraising ceiling reflects long-running beliefs about perception bias on the part of global investors in Africa’s tech ecosystems, particularly among venture capital investors who appear more likely to fund innovators with HIC ties.

WT: What factors are responsible for the funding disparities in the sector and why are they so entrenched? 

Uwase: When we look at the gender disparity, a few factors may contribute to the exclusion of African women from funding opportunities. Below are factors highlighted in our 2022 report on innovators in the supply chain sector.

  • The investment sector is dominated by men. Therefore, due diligence processes and methods to identify new investment opportunities tend to cater more to men.
  • Women entrepreneurs that seek funding face gender bias. As an example, women can be perceived as less skilled than their male counterparts.
  • Capacity-building programs are not well suited for women. As an example, these initiatives can be designed in ways that do not cater to the schedules of women that need to balance work and family responsibilities.

WT: In what ways do the racial and gender gaps affect the progress of the sector or stifle innovation? 

Uwase: These gaps mean there are fewer solutions coming from African founders, who are most familiar with the unique challenges plaguing the health systems. Similarly, there are fewer solutions from female founders catering to unique health challenges being faced by women.

Long-lasting innovations need to consider specific cultural norms and economic challenges in the geographies where they are implemented. Therefore, it is important to create a more inclusive ecosystem that incorporates different voices and approaches. Progressive global norms are thus pushing for diversity, equity and inclusiveness in all sectors.

WT: What would a more equitable playing field look like and what kinds of results could it yield? What would you recommend as a step to be taken that could close the gaps?

Uwase: A more equitable playing field would be when affirmative-type action is taken by funders to ensure that women and African founders get funded at higher rates as compared to the status quo, with female founders also receiving support to address structural barriers they face.

Recommendations are: 

  • Develop more mechanisms that allow African founders to access funding and support easily. The Investing in Innovation program is a good example. This is an initiative we launched with various partners and that is funded by the Bill & Melinda Gates Foundation. The program will provide commercialisation support, access to risk-tolerant funding, and investment readiness training to 60 companies innovating in the areas of the supply chain over two years. Companies accepted into the program will be African-led and provide solutions that serve Africans.
  • Conduct more research to understand the structural barriers African women encounter in the tech ecosystem and develop actionable recommendations to address them.

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