Bridging the financing gap for Africa’s women entrepreneurs
Investing in African Women Entrepreneurs – The 5 things that excite me
As I built the foundation for my work with women entrepreneurs, I decided it was only best that I speak to the very women I want to serve. And I have to say, these conversations have taught me a lot about how African women are positioning themselves in the entrepreneurial ecosystem.
At M-Kyala Ventures, we are speaking to more than 100 women across East Africa, and this is what we have learnt so far.
Several of the reports I have read on the subject of financial inclusion for women entrepreneurs mention that women lack confidence and do not speak up as loudly and openly about their businesses as expected. Interestingly, all the women we have spoken to were able to clearly articulate their business models and visions for scale.
They are all highly motivated by the value their businesses are creating and choose to find ways to overcome the societal biases against them.
One of the women we spoke to, mentioned making numerous visits to banks and microfinances to capitalize her business. She had a good business plan and financing proposal prepared with the support of a leading consulting firm in Uganda but even with all this, she was not successful. She noticed a bias in some of the questions she was asked during her bank visits and decided on a whim to instead send her husband with the same documents to the bank and much to her surprise, he was successful.
She returned to the bank a few months later and confronted the top leadership about this and has since become their female entrepreneur ambassador and led the same bank to build a strategy on how to improve its services to women entrepreneurs.
Her goal was to get what she needed to ran her business so she decided to circumvent the bias against her and use her experience to advocate for other women.
All the entrepreneurs we’ve spoken to launched their businesses with only a couple of dollars in savings but have credited their go to market strategies as the compass they used to reach their target customers. These women were able to translate every dollar into a revenue generating transaction.
Whether formally or informally, each of these women have managed to create strong feedback loops with their customers and actively use these to build their business development plans.
One of these amazing women, owns a car dealership, and when asked how she competes in this very male dominated sector, her response was that she has built her entire customer facing model on trust. She was aware from the onset that customer referrals would be her best acquisition and growth strategy and so by delivering high quality vehicles in a timely manner along with outstanding pre and post purchase customer support, she has become one of the leading importer certified car dealerships in Kenya.
I had many concerns about the effects of COVID-19 on the women entrepreneurs we were preparing to speak to and so we went into these conversations unsure of what we would hear. Much to my delight, we found that these women were already building business hacks to navigate the pandemic and stay afloat.
One of the businesses, an eco-packaging company, was in particular hard hit on both its supply and demand side, but the entrepreneur who runs it, was keen to keep her employees earning, repay her financial obligations and stay afloat. So, when the pandemic began, she was one of the first entrepreneurs to convert her production line from packaging to mask making for health workers.
While there was a significant dip in her revenue, that hasn’t stopped her from using her entrepreneurial skills to pivot her business model.
It is stories like this and many more that we are hearing and understanding that women’s natural instinct to survive and nurture those around them is one of the strengths that makes them resilient and reliable entrepreneurs.
During the discussion on business needs, we found that most women were aware from the onset that they didn’t have all the required business skills and therefore most of them built learning agendas especially on the topic of financial management.
One entrepreneur in the health and wellness sector, spoke to me about her initial fear of money. She said that at the beginning of her business, she viewed money as that thing you get from the bank that leads you to failure and so regardless of her big vision, she kept financing her business organically. Eventually the frustration of the slow pace led her to seek support through an accelerator program where she learnt about financial management and how to use money as a tool for growth. Six months after leaving the program, she found a business partner, raised a significant amount of equity and has grown to 5 new branches.
When women are given the business tools they need, the results and impact are quickly realized in their demonstrated business growth. Therefore, a gender-lens investment strategy that tackles aspects of pre-investment support may be one of the ways to increase investment in women-led businesses.
For a long time in my investment career, I often heard the phrase ‘we can’t find the women owned businesses’ as a reason for not investing in women. This statement used to keep me up at night and is one of the reasons I have become a strong advocate for gender-lens investing.
Where did I find all these amazing women entrepreneurs I am speaking to? The answer is; in peer communities all across East Africa.
These peer communities are made of networks, hubs, associations, investment clubs (chamas, saccos), and many more. They serve the women by providing avenues for skill building, business advisory support, linkages to opportunities, coaching and mentoring and above all peer to peer support.
One entrepreneur, who owns a tour and travel company, was very concerned about how she would keep earning, since the tourism sector had been hard hit by the Covid-19 pandemic. She said her mindset shifted when during one of her network sessions, she heard her peers talk about how to build resilience and pivot your business model to mitigate risk. Using that knowledge, she decided to lease some of her fleet of cars to an online delivery company and develop interesting ways such as creating a YouTube channel to keep her previous tour customers engaged.
Women may not always be in the conventional investment arenas but that doesn’t disqualify them as great entrepreneurs. A sourcing strategy to consider when developing a gender-lens investment thesis, would be to partner with existing women entrepreneurship networks and design your approach to suit their framework.
In future blogs, we shall be sharing some of the networks we’ve met and the work they are doing to build a strong ecosystem of female entrepreneurs in East Africa.