An essential part of every startup’s journey is funding. Research by the IFC shows that only 11% of seed funding capital in emerging markets goes to companies with a woman on their founding team, and the figures are even lower for later stage funding. A report from Mckinsey Global Institute explained that women generated 37% of global GDP despite accounting for 50 percent of the global working-age population. It went on to show that around 316 billion could be added to African GDP by 2025 if the gender gap is bridged! Though investments in the African startup scene have been steadily increasing in recent years, the proportion going to all-female founding teams has changed ever so slightly. The Big Deal report showed that less than 7% of funding went to female CEOs in 2021 in Africa. Less than 1% to single female founders and female-only founding teams.
Unconventional Capital (alias Uncap) aims to make early-stage funding accessible to every good entrepreneur in sub-Saharan Africa no matter their gender, background and location. Speaking on the gender funding gap, Esther Ndeti, Investment Principal at Uncap shares, “our aim is that female entrepreneurs get an equitable experience by redefining their fundraising journey.” For instance, in a typical venture fundraising journey, entrepreneurs are required to pitch to investors subsequently being judged for their demeanor and presentation skill, among other demands that do not accurately reflect the potential of these founders or their businesses. To challenge this status quo, Uncap applies a fully remote and blind selection process based on an algorithm using a model that measures entrepreneurial potential. This non-bias approach favors female founders as decisions are purely data driven. It also eliminates the need for entrepreneurs to penetrate tight-knit investor networks and simply make an online application. Esther emphasizes Uncap’s goal to intentionally invest in female entrepreneurs whilst regularly checking & course-correcting any industry biases, eliminating them from the algorithm and overall decision-making.
Unlike many venture funds, Uncap targets companies which demonstrate the ability to grow into medium- to large-sized businesses and not high-tech, high growth businesses that are mostly run by male entrepreneurs. Using a new revenue-based financing model, entrepreneurs are able to buy-back their equity completely, leaving them in control, something that has proven specifically important to female entrepreneurs. “We strongly believe in the founders we invest in and want them to be in the driver seat of their business. We only hold a minority stake, don’t take any board seats, and generally don’t get involved if not needed” adds Franziska Reh.
Uncap through its marketing strategy also has messaging targeted specifically to female entrepreneurs encouraging them to apply. During the application process they educate entrepreneurs on their application process and terms through webinars, videos and blog posts.
Africa is currently having its moment in the sun in the funding space, however there must be equality in deals offered. Investing in women especially from developing countries provides a multitude of social and economic benefits which in turn will improve Africa’s GDP long term.
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