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Wednesday, February 28, 2024

Women-led health startups keep thriving even amidst funding lags

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Funding disparity is a long-standing worldwide topic that is influenced by a number of variables.

Experts point to gender prejudice as another impediment, rather than a lack of female-led businesses.

Despite financing delays, African health startups founded by women continue to thrive.

When Abimbola Adebakin founded MyMedicinesLab in 2017, her objective was to enable anybody in the country to purchase pharmaceuticals from their smartphone and have them delivered within hours. Daisy Isiaho, co-founder of Zuri Health, is striving to increase access to healthcare thousands of kilometers away in Kenya.

Kenya had just 14 physicians and 42 nurses per 100,000 people in 2016, significantly below the World Health Organization’s (WHO) recommendation of at least 22 doctors and 228 nurses per 100,000 people.

According to Isiaho, the staggering doctor-to-patient ratio, along with little disposable cash, has curtailed access to basic health care.

However, like in Adebakin’s case, potential investors’ concerns regarding product-market fit and sustainability began to fade as COVID-19 progressed. According to statistics from Briter Bridges, a London-based research and data analytics firm focused on neglected countries, Africa’s tech sector garnered $4.9 billion in total expected financing in 2021. Almost two-thirds of the capital went to fintech businesses, with health and biotech accounting for only 8%.

The report stated, “Overall investment in African health-tech ecosystems reached $392 million in 2021, representing an 81% increase over 2020. Despite this rise, investment for health-tech entrepreneurs accounts for less than 10% of total funding in the African tech ecosystem.

According to the analysis, “79 percent of all investment went to firms managed completely by males… In the previous 12 months, only female entrepreneurs raised just 9% of investment. At the confluence of race and gender, Black female entrepreneurs raised just 2% ($1.6m) of investment in the previous year and 9% ($21.6m) of total funding.”

According to industry insiders, this disparity is a long-standing worldwide phenomenon that is influenced by a number of variables. According to one element emphasized in the paper, procedures used to find investment possibilities are more geared toward men.

Businesses led by males are more likely to be recommended because investors frequently locate potential investees through recommendations from portfolio companies controlled by men.

Victoria Fabunmi, Investment Manager of Lagos-based Growth Capital Fund, said, “Experts also cite gender prejudice as a stumbling obstacle, rather than a lack of female-led firms. If you look into the data, you’d discover that female entrepreneurs are raising less overall. Even in terms of valuation, it pales in comparison to what male founders command. I won’t say that the quality of female founders accessible is low; I just believe that there are various cultural or environmental aspects people consider when looking at women or female-led businesses.”

According to Malyse Uwase, Senior Consultant East Africa at Salient Advisory and one of the report’s authors, the health tech industry is furthermore  still in its infancy in comparison to the more glamorous fintech sector,

She said, “The fintech sector was the first to do well on the continent.”

According to Maya Horgan Famodu, founder of Lagos-based venture capital company Ingressive Capital, health-tech businesses often struggle to get into the IT market.

Despite this, female entrepreneurs say they are overcoming obstacles one day at a time and investigating solutions to disrupt restrictive structures and remove misguided gender stereotypes.

Adebakin remarked, “Healthtech alone has not acquired the type of scale that I believe investors need. To reach profitability, we need massive adoption, hundreds of thousands to millions of people. But in healthtech, we don’t have that yet, neither in telemedicine or online pharmacy. When quantities become more appealing, investors become interested. Some industry players feel that in order to close the financial gap, women-led enterprises should be given a purposeful opportunity to catch up, including access to female-focused accelerator programs, health-related initiatives, training, and mentorship. This year, I’ve seen a lot of decks from women who are creating items for women and mothers.

Uwase says female health-tech inventors are critical value drivers in the health-tech ecosystem and should not be given less financial priority.  Uwase adds that this is due to “Many of these advances, such as telemedicine and digital therapy, are perfectly aimed at women owing to their traditional responsibility of caring for their families or elderly parents.

For years, discussions about increasing funding for startups owned by women and other minority groups have been commonplace at tech forums, but female entrepreneurs now say they want to see more action than just talk.

Adeola Alli, creator of OneHealth Nigeria, an online pharmacy and healthcare platform, said, “We normally preach an inclusive process, but when we delve deeper, it’s still 90% male founder-dominated. Women must be intentionally brought to the table by society… For actual parity, or at the very least money significantly weighted in favor of women, we need more women-specific financing.”

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