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Female startup founders have ‘tough sell’ in the region

Female startup founders Unsplash/Linkedin Sales Solutions
Data from Middle East investment fund Wamda showed funding for female startup founders slumped last year
  • Experts say more women making investment decisions are needed
  • Funding for female-led startups has slumped 88%
  • UAE mandates listed companies must have at least one female director

More women need to be in investment decision-making positions to rebalance the gender bias within the Mena startup funding sector, industry experts say.

The amount raised by female-led startups tumbled by 88 percent over the first half of this year to $5.6 million, according to the latest data from Wamda, the largest early-stage investment fund in the Middle East.

In contrast male-founded startups raised $1.56 billion over the same period.

Shameema Parveen, acting co-chair of The Indus Entrepreneurs (TiE) Women Mena, says the global downturn has had “an adverse effect” on female startup founders.

She believes the most effective way to address the funding imbalance is to increase the number of women working as angel investors or in decision-making roles in fund management firms.

TiE’s Dubai chapter is aiming to address this downturn with the TiE Women Mena Programme 2023.

Open to female-run and female-owned businesses from across the Arab world, the initiative includes leadership and networking sessions and the chance to win $50,000 equity-free prize money.

Parveen said the aim of the programme is to “educate decision makers in venture capital about investing with the gender lens”.

Becky Jefferies, a co-founder of HR workflow platform Alfii in Dubai, this week announced her startup had raised pre-seed funding of $2.5 million, which she plans to invest in engineering and talent development.

Jefferies, a former Uber executive, says the small number of female founders pitching in the market is an issue but it is not the only reason for the gender disparity in funding.

“The venture capital landscape and the pitching process are both highly intimidating to navigate, and there is a known gender gap when it comes to confidence,” she tells AGBI.

“Just as women have a harder time ‘selling themselves’ to recruiters and hiring managers when applying for jobs, the same goes for women founders pitching their businesses to potential investors.

“While I don’t think this is the only factor, it’s something that can’t be ignored when it comes to the gap.”

The Wamda data showed that funding for female founders took a major slump in July 2022 when just 0.1 percent of the monthly funding was allocated to female founders.

“It’s well known that the venture capital industry is biased against women,” Jen Blandos, founder of Female Fusion, a UAE community of female entrepreneurs with more than 20,000 members, told AGBI at the time.

In a bid to equalise gender opportunities, the UAE has mandated that all listed companies must have at least one female director on their boards.

But industry experts have differing views about any proposed introduction of gender quotas for startups seeking funding.

“If we want to see any measurable increase in funding going to female founders, quotas are required,” says Lucy Chow, general partner at the WBAF Angel Investment Fund, which gives half of its funding to female or diverse founders.

Bianca Gracias, managing partner at Abu Dhabi legal firm Crimson Legal, says this is an area in which the government is unlikely to intervene.

“It’s not typical government policy anywhere in the world to intervene and impose regulation on how perhaps a venture capital fund should invest its funds,” she says.

“I don’t believe a regulation enforcing quotas for private funding organisations will ever come to fruition.”

Gracias adds that the UAE government could help bring about change by incentivising private funding organisations to support female founders. It already rewards companies with high Emiratisation staffing quotas.

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