Why is there a lack of investment in startups founded by women?
In January and February of 2022 alone, startups in the Middle East and North Africa (Mena) raised $622 million. To have broken the half a billion mark so quickly is unprecedented and a testament to the ongoing growth of the startup ecosystem. But while this highlights a rise in investor appetite for the region’s startups, it seems that this interest is directed mainly at the startups founded by men.
In the first two months of this year, less than $6 million was invested in startups founded solely by women – less than one per cent of the total. Startups with both male and female co-founders raised $17 million in total, or 2.7 per cent of the $622 million. 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 were directed at female-founded startups.
There are of course 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.
To better understand the reasons why women-founded startups are so poorly funded in Mena, Wamda has partnered with TiE Women and TiE Dubai to launch “The Gender Investment Gap” survey. If you are a female founder based in Mena, we would be grateful if you could take the time to fill in the survey.