Recognising the overlooked potential in female led and gender balanced businesses

by Ewa Harcourt-Wood, Laura Deering and Amahle Mkula | 28,Feb,2024 | Articles, Intaba Capital, Q1 2024, Special Feature

 Africa takes the lead in global female entrepreneurship, with women constituting 58% of self-employment across the continent, as reported by the OECD and World Economic Forum. Ironically, this ranking coexists with significant gender based funding disparities. Despite the substantial representation of women entrepreneurs in Africa, challenges persist in accessing venture capital, with men generally receiving more substantial financial support.

The Big Deal’s 2023 report highlighted that start-ups with solo male founders or all male teams secured more than 85% of total funding raised in 2023, and higher in prior years. In contrast, ventures led by solo female founders or all female teams secured approximately 2% of the total funding in 2023, and even less in prior years.

Source: Africa | The Big Deal – Start-up funding in Africa Q3 2023 | Quarterly Round-Up

Beyond the funding disparities in entrepreneurship, a compelling narrative emerges. The 2014 SME Survey conducted in South Africa revealed that 78% of women-owned businesses demonstrated profitability, surpassing the 70% reported for businesses owned by men. This noticeable disparity highlights the yet-to-be-realised potential of women entrepreneurs, emphasising the crucial need for increased capital and support in their entrepreneurial endeavors.

BCG, in partnership with MassChallenge, revealed some staggering statistics on gender-based inequalities in the US. The research and analysis showed that investments in companies founded or co-founded by women stood at $935 000, less than half of the average $2.1 million invested in companies founded by male entrepreneurs. However, despite this funding disparity, start-ups led by women outperformed their counterparts over time, generating 10% more cumulative revenue over a five year period. Furthermore, when analysing how effectively companies turned a dollar investment into dollar revenue, women led start-ups generated 78 cents, while male-founded ones produced just 31 cents. And lastly Illuminate Ventures, as cited by the United Nations (UN), revealed that technology firms led by women yield a substantial 35% higher return on investment compared to those led by men.

Source: Africa | BCG – Why Women-Owned Startups Are a Better Bet

Shifting from the financial perspective to economic and societal impact, businesses owned by women make a significant contribution to employment and economic growth. The UN reports that women reinvest 90% of their income into health and education for their children, in contrast to the 35% reinvested by men, which highlights women’s pivotal role in promoting socio-economic development across Africa.

Thus, investing in women-owned businesses transcends the mere pursuit of gender equality; it represents a substantial and lucrative opportunity for both investors and society at large. The demonstrated profitability and higher returns on investment of women owned ventures position them as a strategic choice for investors seeking financial gains. Beyond financial returns, supporting women owned businesses holds the promise of fostering a more inclusive and robust economy. Women tend to reinvest in their communities at a higher rate and contribute substantially to employment, therefore investing behind women entrepreneurs becomes a catalyst for positive social change.

Research by Kanze published in the Harvard Business Review sheds some light on the persistent funding gap between male and female entrepreneurs, revealing nuanced dynamics at play during Q&A interactions between venture capitalists and start-up founders. They analysed sessions at a start-up funding competition and found that male led start-ups in their sample raised five times more funding than their female led counterparts, despite comparable quality and capital needs. Delving into the questioning patterns, they discovered that venture capitalists posed distinct types of questions to male and female entrepreneurs, focusing on potential gains for men and potential losses for women. This discrepancy revealed that prevention oriented questions significantly impacted funding outcomes. Start-ups led by entrepreneurs facing more prevention questions (women) raised less, emphasising the critical role that questioning orientation plays in perpetuating gender-based funding disparities.

In our view, the biases shown towards female entrepreneurs is due to a lack of representation of senior women in fund management, especially in Private Equity and Venture Capital. Addressing this issue requires emphasising investments in women owned or gender balanced GP management teams. A research study conducted by IFC, Oliver Wynman and RockCreek, showed that female partners invested in almost 2x more female entrepreneurs than male partners. Even more stark was that the research found that gender balanced GP teams generated returns up to 20% higher than male dominated GP counterparts. Thus, statistics reveal a positive correlation between gender diversity and higher financial performance.

In conclusion, we believe that institutional investors with a private market investment strategy can be the driving force to break barriers and ensure more capital is allocated to women owned and gender balanced GPs that will in turn invest more into women owned and gender balanced businesses, thereby enhancing financial and societal impact returns.

Reference list
• Abouzahr, K., Krentz, M., Harthorne, J. and Brooks Taplett, F. (2020). Why Women-Owned Startups Are a Better Bet. [online] BCG Global. Available at:
• Africa Renewal. (2018). Women-led tech startups on the rise in Africa. [online] Available at:
• Authors, M. (2023). The current state of women’s entrepreneurship in South Africa. [online] Women’s Report. Available at: [Accessed 26 Jan. 2024].
• BCG Global. (n.d.). Want to Boost the Global Economy by $5 Trillion? Support Women as Entrepreneurs. [online] Available at:
• Giacomelli, M.C. (2024).  2023  Deep-rooted gender imbalance . [online] Africa: The Big Deal. Available at: [Accessed 26 Jan. 2024].
• Hobart, Julia, et al. “Moving toward Gender Balance in Private Equity and Venture Capital.”, Accessed 31 Jan. 2024.
• Kanze, D., Huang, L., Conley, M. and Higgins, E.T. (2017). Male and Female Entrepreneurs Get Asked Different Questions by VCs — and It Affects How Much Funding They Get. [online] Harvard Business Review. Available at:
• SME Toolkit. (n.d.). South Africa needs more women-owned businesses. [online] Available at: [Accessed 26 Jan. 2024].
• “Why Gender Mix Could Be a Sign of a Successful Manager | Vanguard Switzerland Professional.” Accessed 31 Jan. 2024.

Ewa Harcourt-Wood, Laura Deering and Amahle Mkula
Co-Founders & Analyst at Intaba Capital | + posts