VC funding in decline for female-led Mena startups

• Declining share since 2020
• Less than $500,000 in April
• Government mandates needed

Startups led by women in the Middle East and North Africa are at risk of being left far behind when it comes to raising venture capital funds, data shows.

Since 2020 their share of the total has declined every year from 2.2 percent to less than 0.5 percent in 2023, before bouncing back up – but only slightly – to 1.2 percent last year, according to venture capital company Wamda Capital.

Last month Mena startups raised $228 million, double as much as the month before, but female founders without a male co-founder accounted for less than $500,000 of that, or 0.2 percent.

“Although funding for startups has increased year on year, funding for female-founded businesses as a percentage of the total capital allocated has systematically fallen across Mena,” Sophie Smith, founder and CEO of hybrid healthcare platform Nabta Health, tells AGBI.

Data from Wamda shows that, no matter whether the year is a bumper one for funding or not, all-female teams are receiving less money as a share of total and in absolute terms.

From highs of about $35 million and $51 million in 2021 and 2022, in the following two years funding dropped to just $19 million in 2023 and just short of $28 million in 2024.

Discounting January’s data, which was distorted by a round of debt financing in Saudi Arabia, female-led startups in Mena have barely raised $700,000 this year.

• Barriers remain high for women seeking jobs in the Middle East
• Quotas for funding women-led startups could address male bias
• Female startup founders have ‘tough sell’ in the region

“If the trend is to be reversed, we need government mandates for gender equity in startup funding,” says Smith.

Smith cited the recent decision by the UAE that all private joint-stock companies must include women on their boards as an example of the level of intervention needed to turn the situation around.

“We need to build the pipeline of women writing checks,” Lucy Chow, strategic adviser, 2022 Female Angels, tells AGBI.

Women, however, may be finding funding from other non-traditional sources such as angel investors, crowdfunding and grants from international non-governmental organisations, none of which are counted in Wamda’s data, Chow says.

Nonetheless, “female-led startups won’t scale to the next level without VC funding”.