By Miishe Addy, co-Founder and CEO of Jetstream Africa, an e-logistics startup building digital infrastructure for African supply chains.
Growing up, I thought that the women in my family were remarkable. They had strong entrepreneurial instincts, and built businesses from scratch using only their intellect and the resources around them. My eldest aunt founded a thriving restaurant, spun off a catering business, and turned her car into a taxi service while she was at work. Her younger sister founded a crèche and scaled it up to a 200-student primary and secondary school. My great-grandmother, born in the late 1800s, was a self-made businesswoman in Accra and the breadwinner for her family.
As I got older, I saw that the women in my family were not unique in Africa. Out of necessity, entrepreneurship is more common among African women than men, and the proportion of women entrepreneurs is higher in Africa than in any other place in the world. At the same time, women-led businesses are, on average, smaller and less likely to be supported by outside investment than businesses led by men. There is not a gender gap in African entrepreneurship. There is a gender gap in African scaling. The African start-up ecosystem exemplifies this problem. Less than 8% of the $4.3 billion in funding raised by African entrepreneurs in 2021 went to women-led founding teams.
The beauty pageant problem
In the beauty pageant problem, the pageant judges believe that their job is not to vote for the most attractive contestant, but rather the contestant they think the other judges will find attractive. When the pageant is done, everyone agrees that the winner is not really the most attractive contestant, but rather the most similar to the contestants who have won before.
In my experience scaling a start-up from bootstrap to $5M in equity investment, I have found that many, although not all, mainstream start-up investors approach investing like judges in the beauty pageant problem. Even when they see inherent potential in great, underrepresented founders, they discount that potential because they don’t think the other judges will see it. They believe that the biases of the past will control outcomes in the future. They overlook the role that they themselves play in creating that future. As a mentor and teacher at MEST Africa, Google for Startups, and Founder Institute, I have seen this backward-looking mind-set affect talented founders who are underrepresented in various ways, including women, non-native English speakers, and founders from Africa, generally, when they pitch to Western investors.
Earlier this year, I sat on a panel of judges evaluating virtual pitches from African entrepreneurs. During the Q&A session after one pitch, a judge advised a woman founder to make sure to ‘create FOMO’ among investors by pushing them to compete to invest in her company. The founder stared blankly at the camera. She had not been able to raise a single dollar from investors outside of her friends and family. FOMO is not the issue when you don’t look like the winner of the last beauty pageant.
Bridges to capital
The best solution that I have seen to the beauty pageant problem is structural: as investing becomes more democratic, the investment community evolves toward diversity. Specifically, when African women are the decision-makers at investment funds, they tend to do a better job of assessing the qualities of women-led businesses without distraction. And there are an increasing number of funds led or co-led by African women or that have a focus on investing in African women. These funds act as a key bridge to investment capital for African women entrepreneurs. They include Ingressive Capital, Alithea IDF, FirstCheck, Unicorn Growth Capital, ArchAngel, Octerra, and Logos Ventures, among others.
African women entrepreneurs also act as a bridge to investment capital. During my company’s seed fundraising round I got to know 73 investors. Since raising my company’s seed round, I have made it a habit to connect entrepreneurs I know to great investors in my network, whether those investors invested in my company or not. No strings attached. When I hear that an entrepreneur has secured investment because of an introduction I made, I am ecstatic.
Beyond the beauty pageant
Over the past few years, I have gotten to know several of the most successful start-up founders in Africa. Men who have built businesses collectively worth more than a billion dollars. I have also become friends with, and mentored, African women entrepreneurs at earlier stages in their journeys. The common thread that runs through all of us is not our gender, the country that issued our passports, or our native languages. It’s our drive, our grit, our ability to adapt our organisations to the most dynamic markets in the world, and – most especially – our unbridled ambition to build a better Africa through private sector innovation. These are the traits that define the remarkable potential of all African entrepreneurs. And that’s true beauty.