The magic of diversity, and why 1+1 = 3
A focus on funding female-led start-ups makes business sense because unlocking the potential of women is a win for all
15 August 2024, Johannesburg – In the start-up world you will find many views on whether men or women bring the most value. There is more consensus on the fact that diversity is where the magic happens, where 1+1=3, in the words of Audrey Verhaeghe, CEO of ANZA Capital, a female-led investment firm that is addressing the funding gap for early-stage businesses in Africa.
It is well known that inequality holds the whole ecosystem back from reaching its full potential, yet men and women continue to experience different opportunities in life and in work. From heavier responsibilities at home to lower pay at work, gender inequality is worse in Africa than in many other parts of the world.
In the intense and highly competitive start-up world, gender inequality tends to be magnified. In Africa, women-founded businesses received only 7% of funding in 2023, according to Africa: The Big Deal, a database of start-up funding. The imbalance is also very real on the other side of the funding coin. Just 15-20% of Venture Capital (VC) investors are women and a mere 12% of VC firms have a female managing partner or equivalent, according to financial data and research company Pitchbook.
The team at ANZA Capital, which includes both men and women, is spear-heading efforts to close the gap and unlock the potential of African tech entrepreneurs to create impact and prosperity across the continent. Working to correct historic gender discrepancies by growing female-led firms, ANZA Capital is among a small cohort of organisations that are pushing the ecosystem toward that sweet spot where we all benefit from the best that everyone has to offer.
The female-led aspect of Anza Capital, which was founded with a vision to drive impactful change in the VC space in Africa, was partly by design and “partly due to the convergence of talented, passionate individuals who happened to be women”. Chief Operating Officer at ANZA Capital, Saskia Nysschens says the team at ANZA believes that diverse leadership enhances their ability to understand and address the unique challenges faced by entrepreneurs, especially female entrepreneurs in Africa.
Support from ANZA Capital for start-ups goes beyond financial investment. It could come in the form of mentorship, operational or financial support, access to networks, Intellectual Property(IP) codification, showcasing, fundraising and more.
Michelle Geere, CEO at Adbot, an ANZA Capital portfolio company, says she has an excellent male mentor/advisor within the ANZA team, “who has taught me a great deal because he has been through the same process of building a business and faced similar challenges”. She says her advisor’s insights have been invaluable, “not because of his gender, but because of his experience and willingness to share his knowledge”.
Stereotypes persist
Nysschens says that stereotypes about women’s capabilities in business persist, which is one of the reasons female entrepreneurs struggle to access the capital, mentorship, and networks that are available to their male counterparts.
Tasneem Karodia, Co-Founder and COO of Newform Foods, another ANZA Capital portfolio company, has a first-hand view of how differently a woman of colour is received from a white male (her co-founder). Apart from the fact that her co-founder benefits from often encountering peers who are similar to him, Karodia says the two of them “go into the same spaces and have vastly different experiences”.
The historical under-representation of women in entrepreneurship also means there are fewer established female role models to inspire confidence among investors.
Another critical factor is that women must often juggle multiple roles, including caregiving and household management, alongside their business responsibilities. Wearing many hats means time and resource constraints, although it can also expand capability and build resilience.
As the ecosystem of female-led businesses grows and prospers, the community that is building around it, a sisterhood of sorts, reinforces that growth and development.
Lauren Anderson, CEO at ANZA portfolio company Koa Academy, describes input and support from other female founders as vital to her journey. She says she hasn’t necessarily found being a woman in business particularly challenging “but that probably has to do with the groups that I belong to where it is the norm to be a woman in business”.
Anderson, who co-founded the online school with grade 4 to grade 12 EIB curriculum, says: “Sharing of experience and being very open about challenges and successes has been so helpful. I’ve found that I can ask about anything in the various groups that I am part of, and someone has the answer.”
Women have come a long way in the business world, she says, meaning that she doesn’t “have to try as hard to be taken seriously”.
Adbot’s Geere agrees: “There definitely is a sisterhood, particularly through my investor network. I experience support, encouragement and motivation on a daily basis.
“This network of like-minded women has been tremendously helpful. The immediate response and willingness to share knowledge creates a nurturing environment where everyone can thrive. This sense of community makes navigating the entrepreneurial landscape less daunting and more collaborative.”
While ANZA Capital is intentionally supporting female founders, this is just part of a broader mission to support a diversity of entrepreneurs, including other traditionally under-represented groups, including businesses from outlying areas and youth-led ventures.
Rather than replacing all-male teams with women, Verhaeghe says, diversity in investment teams brings varied perspectives, which can lead to more balanced decision-making. All-male teams, she says, might miss out on understanding certain nuances and challenges faced by female entrepreneurs. That is not simply about being a woman, but rather about being able to understand the complexities that female entrepreneurs must navigate every day.
Karodia, of Newform Foods, agrees. To get the best of both genders, she says, men need to be part of the solution. “They need to be included early in the conversation.”
Unique strengths
Geere adds that men and women bring unique strengths to their entrepreneurial endeavours. “Being aware of your strengths and using them to your advantage can serve as a secret weapon in navigating the start-up world.”
She adds: “More investors should focus on funding women-led businesses and fostering communities within their investment groups. Building such networks can lead to more opportunities for mentorship, collaboration, and collective success.”
Verhaeghe adds: “In our experience, the unique perspectives and approaches that men and women bring can complement each other, leading to well-rounded business strategies.”
The fact that female-led startups will often face biases during fundraising provides its own challenges for funders. Verhaeghe says that female entrepreneurs may, for example, encounter additional scrutiny, and it is crucial “to recognise and mitigate these biases”. Being aware of potential biases means ANZA Capital makes more informed, fair and inclusive investment decisions.
Geere, of Adbot, agrees that the key to addressing this issue lies in awareness. “Being mindful of who we might inadvertently exclude on this journey is essential. Inclusivity should be a conscious effort. Striving for an environment where diversity and inclusion go beyond gender can create a more balanced and equitable entrepreneurial landscape.”
Verhaeghe believes that as long as systemic inequalities exist there will be a need for organisations that specifically focus on developing female talent and investing in female entrepreneurs. As for the risk of men feeling excluded, Karodia thinks that some men might feel marginalised as “unfortunately, that may be an outcome of trying to create balance”.
Geere concurs: “We are currently in a period where it’s necessary to address and rectify past inequality, and that process doesn’t always align with a 50/50 approach. Correcting historical wrongs often requires focused effort and sometimes a disproportionate allocation of resources and opportunities to those who have been marginalised. This isn’t about exclusion, but about achieving genuine equity by uplifting those who were previously excluded.”
The numbers may not immediately add up for everyone but, Nysschens notes that: “By fostering inclusive environments, we can harness the full potential of diverse perspectives, leading to more innovative and effective solutions. This collaborative approach ensures that the strengths of each gender complement each other, creating a dynamic where 1+1=3, not just 2.”