Venture funding into startups led by female founders has continued to decline. Indeed, in the first quarter of 2025, only about 2% of total funding in Africa was raised by female-led startups. Yet, the tally will reduce if you narrow your search to startups led only by female founders.

Comparatively, 79 per cent of the funding went to either male-led startups (11 %) or male-only founding teams (67%). Diverse founding teams comprising male and female founders attracted 20% of the total.

Asked if this should be a cause for worry, Executive Director of BigCheq Consulting and Zuri Circle CEO, Linda Obi, admitted that while it is indeed concerning, the worry should be for the industry and investors in general.

“The deeper concern isn’t just that women receive only 2% of VC funding. It is that this 2 per cent still sparks headlines, panels, and applause. We have normalised underrepresentation and started rewarding survival instead of scale,” she told Technext.

She pointed out that female founders perform better than their male counterparts in several key sustainability metrics like capital-efficient growth and better burn rates, which are characteristics of better-run enterprises.

“Women-led startups in Africa are delivering capital-efficient growth, often with 30–40% lower burn rates than male-led teams. In Nigeria, startups like Shuttlers (Damilola Olokesusi) and Herconomy (Ifedayo Durosinmi-Etti) are proving women can build tech with scale, structure, and sustainability. So yes, it (low funding) is a worry, not for women, but for the industry losing its sharpest bets,” Linda Obi said.

She went ahead to assert that venture funding isn’t a meritocracy.

Rather, it is a networked, narrative-based, risk-adjusted bet. Thus, until more women enter investment committees, own funds, or shape the funding filters, female founders will keep fighting for a seat instead of owning the table.

Of grants as handouts to female founders

Female founders in Africa may have raised $10 million in the first quarter of the year, but half ($6.2 million) are form of grants, which many consider handouts rather than an outcome of true faith in these startups.

If grants are deducted from the total, the share of funding raised by female CEOs in Q1 2025 would fall to 0.7%.

The Zuri Circle CEO agreed that grants are not a reflection of belief in the startup. She, however, pointed out that this is not the founder’s fault.

“Let’s be brutally honest: Grant-heavy capital is often a reflection of ecosystem guilt, not ecosystem belief. But this isn’t the founders’ fault — it’s the structure of the room. In Q1 2024, over 52% of funds raised by women-led startups were grants. Less than 0.5% of African VCs are women GP-led — so who’s writing the cheques with belief?” she noted.

She, however, stated that grants are not inherently bad, as they are capital entrusted to a founder with a bit of conscience. The problem, however, is when they become the ceiling, not the stepping stone. Thus, while grants should not replace investment, they should de-risk innovation.

“Grants should de-risk innovation, not replace investment. When a woman founder gets a $50,000 grant and stretches it into an actual business — that’s not a handout. That’s capital alchemy. But she deserves a Series A, not just a spotlight,” Linda Obi said.

Women founders prioritise long life over quick exits

The African tech space is male-dominated. This domination has always led to claims of biases and sentiments against women in the space, a situation that has been fingered as a major reason for the slower performance of women founders.

But does this longstanding claim still hold? Is this still the case, or are there other factors making women-led startups less appealing to investors who want to put their money in startups they believe would guarantee returns?

“Bias exists. Let’s not romanticise it. But what’s more dangerous now is the illusion of progress.
We have panels, hashtags, and startup accelerators about women — but not many that are led by women, funded by women, or scaled through women,” Linda Obi said.

She claimed that while many male founders get funded for their potential, female founders are forced to prove perfection, a gap and injustice that needs to be curbed.

She added that many women founders are building in overlooked verticals like care, health, education, and marketplaces. These verticals are usually not considered “sexy” enough for traditional VCs who prefer to chase after fintechs or the new favourite, artificial intelligence startups.

“Women often build more sustainable but slower-scaling models — VCs sometimes misread this as a lack of ambition, when in fact it’s capital-intelligent growth. So are women less appealing to VCs? No — VCs are still taught to value velocity over viability. And women founders are now building companies that choose long life over quick exits,” she said.

She pointed out that it is not as gloomy for women founders and women in tech as might be projected, as opportunities are ripe. She noted that women are already leading in trillion-dollar sectors like femtech, agritech, edtech, and informal trade digitisation, however, tech hasn’t caught up to their reality.

Thus, on improvements that need to be made, she advocated funding the Real Economy while moving beyond fintech obsession and investing in sectors where African women already lead. She also advocated for the backing of female general partners because if more women fund managers exist, female founders would stop being pipeline problems and start being portfolio wins.

“Ownership is the ceiling. Let’s stop integrating women into a broken funding model — and start reimagining the model through a different lens,” Linda Obi said.