The gender gap in startup investment

Almost two thirds of female founders believe that Middle East and North Africa (Mena) based investors are less likely than global investors to invest in women-led startups, while 66 per cent believe that the best way to bridge the gender investment gap is to have more women partners in venture capital firms. 

The findings are part of a report published today by Wamda and TiE Dubai and TiE Women, which seeks to better understand the reasons for the gender investment gap in the Mena region and how to overcome them. 

In the first nine months of this year, less than $50 million was invested in startups founded solely by women – about 2 per cent of the total ($2.4 billion). Startups with both male and female co-founders raised $127 million in total, or 5 per cent of the total. Investment figures from last year paint a similarly dire picture. The region is not unique in this regard, investment patterns here are reflective of global trends, where in 2021 just 2 per cent of the $6.4 billion VC investments was directed at female-founded startups.

There are many theories as to why this is the case, lack of pipeline is commonly cited by investors, but that is an oversimplification of complicated societal and cultural structures that present greater barriers to entry for women in this space. Where women do succeed as founders, they tend to create more jobs and produce higher returns. According to research from Boston Consulting Group, if women and men participated equally as entrepreneurs, global gross domestic product (GDP) could rise by approximately 3-6 per cent, boosting the global economy by $2.5 trillion to $5 trillion.

“There is a significant gender gap in the market mostly due to prevailing cultural and social norms. I am optimistic that through these reports we are able to raise awareness on women’s rights and inspire women to achieve their full potential,” says Farah Emara, co-founder of Egypt-based agritech Freshsource. “Building FreshSource as a woman in the agriculture industry has been a challenging journey but I am lucky to have a great co-founder, team, mentors and programmes that can support me along the way.”

“The Mena region has made tremendous strides in enabling the startup ecosystem and increasing the amount of funding available to founders, but female founders continue to face a significant disadvantage when raising investment. This report highlights the struggles that women face and the steps that we as an ecosystem can take to improve the gender investment gap,” says Fadi Ghandour, chairman of Wamda.

“I am pleased to see that “bridging the gender gap” has been gaining momentum especially in the startup ecosystem. But, judging by this latest survey with Wamda, we still have a long way to go especially in this region. We need to look at women entrepreneurs as just entrepreneurs because our global TiE Women competition has shown us that these entrepreneurs are innovative and deserve to be treated as equals with the same checks and balances as any other business that is looking for investment. This means our investor ecosystem needs a mindset change,” says Ashish Panjabi, president of TiE Dubai.

To access the report please click here