“Look, if every investor simply committed to funding at least one woman-led business every year, our discussions would be very different.” - Eghosa Omoigui
Women-led startups received less than 2% of VC funding in 2023 while Black-founders accounted for only 0.48% of VC funding in the same year. This makes it clear that diverse founders face the same challenges of access to funding, dealing with very similar setbacks. Though our investment thesis is around racial diversity, we find it important to amplify all voices and to share notes in order to find effective solutions that work for all.
On the last day of International Women’s Month and in light of the theme “Invest in Women, Accelerate Progress”, we interviewed EchoVC’s founder Eghosa Omoigui to have his views on tangible actions the industry should take to move the needle when it comes to closing the gender gap. For context, EchoVC is a fund unapologetically investing in underrepresented founders and underserved markets since 2011.
Sharing some of the nuggets we got from this conversation!
Celebrating International Women’s Month: A conversation with Eghosa Omoigui
BKR: To start us off, we’d love to know what EchoVC is doing differently from other standard Silicon Valley VCs to be inclusive and find the best female founders in the markets you operate?
EO: We realized early on that biases, both conscious and unconscious, were causing harm in the ecosystem. So, we decided to tackle them head-on:
We actively hired talented women for important positions, i.e. decision-making and check-writing roles.
We recognized that the standard evaluation process wasn’t quite working, so we made a key change to it, and encouraged founders to ‘pitch’ without a deck. We found that that worked much better to access great deals.
We decided to pay close attention to gender constructs within cultural contexts and to design support infrastructure to encourage the best out of our women founders.
And finally, we adopted the role of hypeman/women of women founders! We believe it’s key to increasing their visibility, and by the same token, their chance of getting funding.
We have invested in incredible businesses founded and led by extraordinary women. A few examples include:
Kukua (think Sesame Street for Africa, building competency when it comes to STEM education for African children);
LifeBank (think the Uber for blood and progressively, all medical supplies); and
Traders of Africa (the AliBaba for Africa-made/sourced goods).
BKR: That’s pretty impressive in terms of way of operating! How would you score the rest of the VC industry for diversity in funding decisions?
EO: On a scale of 1 to 10, I’d give a 1.5 – there’s a lot of room for improvement.
BKR: Curious to know what you think are the key reasons for that low score? And how does this specifically impact women-led startups?
EO: From our standpoint, it’s the institutionalized bias within investment teams and decision-making processes that is the major barrier to diversity. Deep-seated stereotypes and unconscious biases often lead investors to question women's capabilities unfairly.
This lack of diversity not only affects the quality of funding decisions, but also it puts women-led startups at a significant disadvantage, needing them to put in multiple efforts for middling outcomes.
BKR: And if we look outside of the direct impact on these businesses, what would you say are the consequences of the lack of diversity in funding on the ecosystem?
EO: It’s actually quite dramatic when one thinks of it. The lack of diversity seriously hampers economic growth and innovation. For example, increasing women's participation in the digital economy would significantly boost African nations' GDP.
Women reinvest up to 90% of their income back into their families and communities, compared to 35% by men, amplifying the effects of their economic success.
In addition, women-led enterprises tend to hire more women, addressing the gender gap in employment. By investing in women tech entrepreneurs, more inclusive workplace environments are created, not only within their companies, but also throughout the value chains they participate in.
BKR: These are indeed dramatic missed opportunities, which seem all too common to ecosystems that are unfortunately segregating out a portion of their talent pool. With respect to your reference to Africa, do you think women-led startups are uniquely positioned to serve the underserved markets? If so, what edge do they have?
EO: Yes, that’s what we observed! From our perspective, investing in women entrepreneurs isn't just an ethical decision; if gotten right, it's a strategic business move with clear economic benefits which can have a strong multiplier effect in emerging markets. The top three characteristics we often see are:
Diversity-driven innovation: Women bring different life experiences and perspectives to business, enhancing creativity and leading to the development of novel solutions and products.
Market insight: Women control a substantial portion of consumer spending and have unique insights into the largest market segment - women themselves.
Strong performance under adversity: Research shows that women-owned startups, despite often starting with less capital, tend to generate proportionally higher revenues than those owned by men. Women entrepreneurs often have to overcome higher barriers to secure funding, which indicate that those who do are particularly resilient and capable, suggesting a high potential for return on investment.
BKR: Can you share with us what you know of the fundraising experience of female & diverse startup founders in the ecosystems you navigate in?
EO: It’s a very poor one! We hear some terrible stories that suggest an incredible paucity of home training on the part of certain investors.
I think, if we are looking for sustainable solutions to these types of experiences, we need to start presenting data, i.e. strong business cases, that demonstrate the untapped potential and unique advantages of investing in these enterprises, not only stats on the current landscape.
Progressive policies and government support can also go a long way in fostering more nurturing ecosystems. For example, Kenya is well known for their proactive stance in supporting the tech ecosystem. The Startup Act in Tunisia offers various incentives, including tax benefits, salary grants, and easier access to funding, which have made it an attractive environment for women entrepreneurs. Zambia has seen government initiatives aimed at boosting entrepreneurship and innovation, with a focus on women. Rwanda has been exemplary in its gender policies and support for women in business at all levels, including in government and in technology.
BKR: Systemic biases are hard to get rid of, but these tips are definitely a good starting point to make the ecosystem shift hat. To close us off, given our understanding that institutional change will not be solved overnight, can you please share tangible steps VCs can take today, as a starting point, to address the funding gap?
EO: There are a few things that we found worked well:
The first would be to actively seek to diversify their investment committees, investment teams, and pipeline. For the latter, it can either be directly or through other VC funds.
The second would be to thoughtfully invite women founders into supportive networks of investors, mentors, and partners focused on supporting women entrepreneurs. Networking is vital for securing capital, and women often face more significant hurdles in accessing networks that lead to funding.
Finally, when possible, working with government bodies and policymakers to create more favorable conditions for women entrepreneurs to access financing. This could involve advocating for policies that support gender equality in entrepreneurship, such as tax incentives for investors in women-led startups or public funding initiatives. These shorter-term initiatives can support an increased flow of capital and provide the appropriate backdrop to facilitate data collection for the creation of more business cases. These are simple things to do for any VC that wants to play its part in closing the funding gap. But ultimately, the solution is simply to invest in women. Look, if every investor simply committed to funding at least one woman-led business every year, our discussions would be very different.
BKR: These tangible steps are actually quite simple. What is required is genuine intent and willingness to act on them. Thank you so much for taking the time out to talk to us and for these valuable words of advice!