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Investors in Africa are increasingly recognising the economic potential of gender lens investing. This is evidenced by the fact that supporting women-led businesses and inclusive initiatives drives stronger financial returns and delivers broader social impact.
Female founders usually get the crumbs of investments, with the larger share going to their male counterparts. According to data from Africa: The Big Deal, female chief executive officers on the continent attracted only $48 million in funding in 2024, a four-fold decline from 2023 and the lowest since 2019. In contrast, male-led startups secured nearly $2.2 billion during the same period.
Also, only 1 percent of the total funding went to solo female founders or all-female founding teams, while solo male founders or all-male teams captured 95.5 percent. Between 2019 and 2023, just 10 percent of Nigerian female-founded startups secured funding, amounting to only 0.7 percent of the country’s $600 million total deal volume.
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Globally, early-stage venture capital funding in female-founded companies has stalled over the past 30 years. According to data from the Gender-Lens Investment: The State of Women in 2025 report, the share of VC capital directed to all-female teams in the US peaked at 2.5 percent in 2019, dropping to just 2 percent by 2024.
While 6.9 percent of all VC-funded companies in 2023 had all-female leadership, the smaller capital share suggests these businesses are still receiving less funding on average than their male-led counterparts.
This imbalance represents a missed economic opportunity, one that investors and fund managers are seeking to close as evidenced in conversations at the recently concluded 21st Annual Africa Venture Capital Association (AVCA) Conference and VC Summit, which was held in Lagos.
“Less than 2 percent of capital today is going into female businesses in Africa,” said Adesuwa Okunbo Rhodes, founder of Aruwa Capital Management. “If you start to invest when no one else is looking, you can capture some of the best investments.
Rhodes stressed that gender-led investing is far more than a charitable endeavour as it is a strategic investment approach with substantial economic potential.
“It’s not a niche or a charity case,” she stated. “It is a venture-style arbitrage opportunity, a chance to find undervalued assets and drive outsized returns.”
By focusing on female-led businesses across entire value chains, investors can identify unique market opportunities often overlooked by traditional investment models.
Speaking during the “Achieving Gender Balance in Private Capital” roundtable on the sidelines of the summit, venture capitalists and industry leaders proposed bold strategies for advancing gender lens investing and closing Africa’s gender funding gap.
One of the central ideas put forward was the concept of “carrying carrots,” incentives for general partners (GPs) who embed gender diversity in both their teams and investment portfolios.
“We need to incentivise GPs to be more intentional with gender-lens investing,” Rhodes explained. “If a GP meets certain criteria, whether in leadership, entrepreneurship, or consumption, then there could be an increase in their carry split. For instance, moving from an 18-20 percent split to something more substantial, like 25 percent, if they meet gender representation targets.”
She further added that incentives should not only apply to portfolio companies but also to the composition of the GP’s own investment team.
“If you’re able to maintain, say, 40 percent female representation in your investment team, not including support staff, then that should also warrant an increased carry or management fee,” she said.
Beyond incentives, the group identified impact-linked rewards as another key lever. Institutions such as Value for Women and development finance agencies were cited for offering lower interest rates to portfolio companies that met gender balance targets.
However, Rhodes emphasised that aligning these incentives across both GPs and LPs is critical to avoid misalignment. “It’s not enough if fund managers are acting alone. LPs must also back them with aligned financial structures.”
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Education and storytelling also emerged as major pillars. “It is not all roses,” said Rhodes. “Many companies start with no women in management. But with consistent engagement, education, and technical assistance from LPs, real progress can happen.”
Tokunboh Ishmael, Co-founder and Managing Director at Alitheia Capital, echoed the importance of accountability and transparency from Limited Partners. “LPs need to demand not just one or two aspects of the 2x criteria, but all of it, founder representation, leadership, management, and products and services,” she said.
She noted that performance-linked carry should come with both carrots and sticks. “We discussed that perhaps even if performance targets are met, carry could still be withheld if gender impact is not achieved.”
She also emphasised intentional allyship. “It starts with those who allocate capital. The entire value chain, from allocators to LPs, must prioritise gender balance in recruitment and capital deployment,” Ishmael said. “We need more male evangelists to publicly champion this cause.”
Sarah Ngamau, Managing Director and Partner at Moremi Fund, added that bold goal setting is vital, especially for larger funds that often lag.
“We need audacious targets at both fund and portfolio levels,” she said. “More female partners, more carry allocated to women, and portfolio benchmarks, like 20 percent female-founded companies to start, building toward 50 percent.”
Ngamau stressed the importance of looking beyond just ownership to the broader supply chain. “We must also support smaller female-led businesses that supply larger firms,” she said. “They may not be PPE-scale, but they are essential to an inclusive ecosystem.”
She also shared compelling examples that demonstrate how gender diversity correlates with better financial performance. “It is also risk mitigation,” she said, citing a company where a former board member became CEO and drove transformative results.
Echoing this, Rhodes pointed to data from the IFC showing that funds with at least one female partner reported 29 percent higher portfolio performance index (PPI) and 17 percent higher total performance index (TPI) compared to those without female leadership.
Najada Nkumbuli, head of Investments and Partnerships at Visa Foundation, emphasised the importance of disaggregating data. “We need to show the diversity among fund managers and build track records for both small and large funds. That way, we create space for investment strategies that matter across the spectrum.”
